Are Wells Fargo Home Rebate Card Rewards a Gimmick?

Wells Fargo loves to brag about the rewards it pays homeowners with its Home Rebate Card. The bank claims to have paid Wells Fargo homeowners principle reduction to the tune of $50 million (a nice round number) since the program started in 2007. Sounds like a good deal or is it like those airline reward points from some credit cards that never materialize? Here’s the scoop on the Wells Fargo Home Rebate Card to help you decide if it’s a worthwhile deal.

How The Wells Fargo Home Rebate Card Works

The program is open to Wells Fargo mortgage customers that take out the Wells Fargo Home Rebate credit card. Once you’ve got the card you get a one percent rebate on your eligible purchases that is applied to your mortgage loan’s principal balance.

The bank doles out the rebate in 25$ increments meaning you’ll get $25 credited to your mortgage principal after you spend $2500.

Assuming that the program stays around for 30 years, if you have a $250,000 home loan and you spend that $2,500 every month using the card, Wells Fargo would pay down $8,525 of your mortgage principal balance over 30-years of the mortgage.

This amount is compounded with a shorter mortgage amortization period to a savings of approximately $16,000. It also shortens your term length to 28 years and seven months, meaning you get to pay off that mortgage loan a bit faster.

This is all done by Wells Fargo automatically, the only thing you have to do is use the card for all of your purchases. Wells Fargo sweetens the deal (temporarily) by upping your rebate to three percent for groceries, purchases at the drugstore, and gasoline. Unlike the Bank of America rewards card Wells Fargo only rebates the higher amount for the first six months that you’ve got the card.

There is fine print that you should be aware of that excludes some times of mortgage loans including commercial properties, 2nd mortgage loans, agricultural mortgages, piggyback loans and any home loans that Wells Fargo hasn’t funded yet.

The Truth About Credit Card Rewards

The mortgage principal reduction paid by Wells Fargo is a good thing; however, there is a downside like any other credit card offer out there. The biggest downside about Wells Fargo’s Home Rebate Rewards is that you have to open a credit card account to participate. Credit cards are just a means to acquire more debt, especially if you use the program as Wells Fargo intended.

This isn’t necessarily a bad thing if you pay off your purchases every month; however, if the financially irresponsible could find themselves with even more debts.

Another problem with Wells Fargo’s Home Rebate Rewards is that you’re only earning one percent. There are better offers out there that pay as much as five percent on certain purchases averaging two to three on everything else.

You could apply for a credit card with a better cash rewards program and send in your cash rebates to Wells Fargo as principal payments and come out ahead.

If you’re interested in saving money on your mortgage financing, adopting a bi-weekly payment schedule with any of today’s best mortgage lenders pays down principal and has much more compounded savings than any credit card reward program.

Another problem with Wells Fargo Home Rebate Rewards is buried in the fine print the bank discloses that if they ever sell your home loan your eligibility to participate ceases. They can also pull the plug on the program at their discretion.

As with any credit card if you carry a balance you’re paying a lot more in interest than you’re earning so the net effect is that you’re losing money to get one percent of your purchases.

Pros & Conos of Wells Fargo Home Rebate Rewards

Wells Fargo Home Rebate Rewards Card Pros:

  • No annual cardholder fees
  • No dollar limits on the rebates you earn
  • Your Mortgage Principal pays down faster
  • Pay Less Mortgage/Compounded Savings
  • Shorten Your Mortgage Term Length

Wells Fargo Home Rebate Rewards Card Cons:

  • You have to get a credit card
  • You have to spend to earn mortgage credits
  • Finance charges if not paid off every month
  • More debt
  • Your mortgage could be sold and you’re out of the program
  • Wells Fargo could dump the program

Are Wells Fargo Home Rebate Rewards a gimmick? Considering how much money banks like Wells Fargo make off credit card reward programs it sure sounds like a gimmick to me, but you decide.

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You can learn more about getting the best deal on your next home mortgage loan by checking out my free Underground Mortgage Videos.

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Get The Lowest Refinance Rates By Improving Your Credit Score

Are you frustrated shopping for a new home loan because the refinance rates you’re being quoted are higher than what lenders are advertising? If so, the likely culprit is your credit score. Did you know that advertised refinance rates are usually based on having a credit score of 720 or higher? Here are several tips before you refi to improve your credit score and make sure you’re getting the lowest refinance rates.

Refinancing rates crept up slightly with the New Year; however, according to the Mortgage Bankers Association demand will remain strong throughout the year. This means there will be a lot of opportunities for you to take advantage of low refinance rates, even if you have credit challenges.

How To Get The Lowest Refinance Rates Possible

If you want the best possible deal on the lowest refinance rates the first step is to get your finances in order starting with your credit reports.

Your credit report is a record of your past finances including car loans, credit card payment history including any collection activity or liens. Credit reports typically go back for seven years. Your credit score is derived from the contents of your three credit reports.

The better (higher) your credit score, the closer your refinance rates will be to what you see lenders advertising. That’s why it’s worth investing a little bit of your team cleaning up the contents of those credit reports.

Just why is that mortgage rate so low?

In this article I’m talking about getting the lowest rates you see lenders advertising. There is a catch when shopping from today’s best mortgage lenders. There’s always a catch right?

When you’re shopping for refinance rates you’ll find that the lowest mortgage rates include discount points. That means you’re paying a fee to get your interest rate that low. One discount point is typically one percent of your mortgage amount and lowers the interest rate by .25%.

If the mortgage rate you’re being quoted requires 1.5 points on a $200,000 home loan you will be required to pay $3,000 at closing just to get the refinance rates you’ve been quoted. Should you pay discount points to lower your interest rate?

Most homeowners want to avoid paying discount points when refinancing. Mortgage rates are still near historically low levels and the amount of time it takes to recoup the fee you’re paying generally makes paying points a bad idea.

When shopping for the lowest refinance rates ask your loan officer for zero point quotes. If you’d like to see how paying this fee affects your payments there is a table on page three of your Good Faith Estimate.

If you haven’t already done so you should head over to the government mandated website AnnualCreditReport.com. The Fair Credit Reporting Act requires the three credit bureaus (Equifax, TransUnion and Experian) to provide you a free copy of your credit report every year. This credit report does not include a credit score; however, if you’re a member of a credit union most offer low-cost monitoring services that include access to your credit score.

When you apply for mortgage refinancing the lender runs your credit and reviews your middle credit score. Suppose your three credit scores are 640, 660, and 720. The lender will base your refinance rates on the 660 credit score. Mortgage lenders use the “middle” score and do not average the three.

How To Improve Your Credit Scores

The most important thing you can do to improve your credit score is to pay all of your bills on time. In the short term you can boost your credit score by paying down the balances on your credit cards below 30% of your credit limit.

While you’re reviewing your credit reports if you find mistakes or inaccurate information each credit agency accepts online disputes you can use to have the information removed. Removing inaccurate negative information from your credit reports can significantly improve your score.

Shop Smartly For Refinance Rates

Many homeowners refuse to provide lenders with their Social Security number when shopping for the lowest refinance rates for fear of damaging their credit score when that lender runs their credit.

It is true that having a mortgage lender run your credit will lower your credit score; however, this is the only way to get an accurate quote based on your finances. If you don’t provide your Social Security number when requesting refinance quotes you’re going to wind up with someone’s guess of what your interest rate should be.

If your credit isn’t where you’d like it to be you risk losing your quoted rates when the lender does run your credit score.

The best strategy for minimizing the impact to your credit score is to limit all of your refinance rate quotes to a two week period. If you do this you’ll only get dinged for one credit inquiry. Always provide your Social Security number when securing mortgage quotes to make sure the quotes you’re getting are accurate.

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You can learn more about getting the best deal on your next home loan by avoiding junk fees and unnecessary points by checking out my free Underground Mortgage Videos.

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Your Mortgage & Your Credit

Your credit rating is one of the primary considerations that a mortgage lender uses when deciding whether or not to approve your mortgage loan. This will also help them determine your mortgage interest rate. Credit ratings have become much less restrictive when applying for loans today; however, excellent credit will guarantee a better interest rate.

The first thing you must do is ensure your credit reports are accurate. To do this you’ll need to request a copy of your credit report from each of the three credit reporting agencies: Equifax, Experian, and TransUnion. Be careful when obtaining your credit reports as many companies providing these reports will almost always try and sell you services that you do not want or need.

Recent legislation requires reporting agencies to provide one free copy of their credit history per year. You can sign up for this at:

http://www.annualcreditreport.com

This site will allow you to receive one report for each of the reporting agencies every twelve months. If you are unable to use this service or need additional reports you will need to pay for them.

Don’t pay for credit reports… Congress passed a law making them free for everyone.

You will need to carefully review each of these credit reports for errors. If you discover errors you can dispute items on your credit report by contacting the individual credit agency. Contact information for each credit agency is listed below:

Equifax

http://www.equifax.com
(800) 685-1111

Experian

http://www.experian.com
(888) 397-3742

TransUnion

http://www.transunion.com
(800) 916-8800

The credit agencies use the information on your credit history to calculate your credit score. A credit score is a complex forumla that evaluates the many types of information found in your credit file. A credit score is used by lenders to help determine whether a person should qualify for a loan, credit card, or service such as a cell phone. Most credit scores estimate the risk incured by lending an individual money or providing them with services: specifically, the likelihood that a person will make their payments on time during the next two to three years. Generally, the higher the score, the less risk the person represents to a lender. The free credit reports you receive online typically do not show your credit score; however, you probably won’t need it and if you do your lender will tell you what it is.

You can learn more about your credit and your home loan by checking out my free Underground Mortgage Refinancing Videos.

Beware Free Credit Report Dot Scam

If you’re thinking about mortgage refinancing the first thing you should do before all else is check your credit reports. Don’t waste money buying credit reports or signing up for one of those credit monitoring services just to get a “free credit report.” Here are several tips to help you check out your credit prior to refinancing without wasting any of your hard earned cash.

Credit Reports Are Free…Period

Legislation in the United States known as the Fair and Accurate Credit Transactions Act passed in 2003 was intended to help you protect your credit and help prevent identity theft. This law requires the three credit reporting agencies that maintain your credit reports to provide you one free copy of your credit report every year. There are no fees or services to try…this is not to say the credit agencies won’t try and up sell you with a credit score ; however, you really don’t to pay for that either.

Free Credit Report dot what? It seems the Federal Trade Commission has grown a sense of humor. Remember those annoying “Free Credit Report” commercials on TV? Check out the FTC’s spoof of one misleading website’s commercials:

All you need to get a truly free credit report from Equifax, Experian, and TransUnion is to visit the website AnnualCreditReport.com The website is secure and sports the latest encryption; however, if you don’t feel comfortable entering all of your personally identifiable information including your social security number into a website you can get the same reports sent to you by calling 1-877-322-8228 or mailing a written request to:

Annual Credit Request Service
P. O. Box 105281
Atlanta, GA 30348-5281

It’s important to review your credit reports (make sure you check all three) every year in order to catch mistakes or identity theft should you become a victim. Mistakes in your credit report can result in higher interest rates or fees such as security deposits unnecessarily. Millions of Americans in the United States become the victim of identity theft every year. In fact, your chances of becoming a victim are statistically one in twenty.

Before you think about applying for a home loan or refinancing your existing mortgage go over all three credit reports with a fine-tooth comb. If you find mistakes in your credit reports each credit agency has a procedure for disputing errors. Correcting errors in your credit reports is free by the way…don’t let someone con you into purchasing their magical credit repair “kit.” More information about identity theft and protecting yourself is available free of charge on the FTC website at ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357).

Can Bankruptcy Stop Foreclosure?

annual percentage rate Can Bankruptcy Stop Foreclosure?The “credit crisis” along with the predatory lending practices of companies like Countrywide Home Loans has left a record number of homeowners facing foreclosure in the United States. This is the first article in a series I am writing about avoiding foreclosure; if you’re a homeowner in trouble with your mortgage or have already received a foreclosure notice, I recommend subscribing to my RSS feed using the orange button on the left and register for my “Mortgage Secrets Newsletter.” Here is part one in the series of articles entitled “Avoiding Foreclosure.”

Most homeowners that are falling behind on their payments and are deeply in debt consider bankruptcy at one point or another. While bankruptcy will not discharge your mortgage loan, it will allow you time to restructure your debt and make it easier to manage. Chapter 13 Bankruptcy is designed to stop foreclosure on your home and protect your other assets. When your Chapter 13 bankruptcy petition is filed in Federal Bankruptcy Court, all foreclosure proceedings on your home stop instantly.

Chapter 13 results in an automatic stay that prevents your lender foreclosing on your loan. Your creditors are not longer able to harass you about missed payments or coarse you into a payment arrangement. There are requirements you must meet in order to qualify for protection under Chapter 13; you must for instance be a “wage earner” and show that you have a steady source of income to restructure your debts.

Chapter 13 bankruptcy is basically a repayment plan that allows you to make fixed payments for a number of years. This repayment plan essentially refinances your debts protecting your living expenses before your fixed payments are made. Your pre-bankruptcy debts including your past due mortgage payment are all included in this repayment plan. After making your bankruptcy petition under Chapter 13 you will be required to make all of your mortgage payments going forward in addition to your fixed payments.

Bankruptcy under Chapter 13 allows you 3+ years to catch up your debts; however, if you fall behind on your payments this court-ordered protection is withdrawn and your lender may resume foreclosure of the mortgage loan. Nearly two-thirds of homeowners that file Chapter 13 bankruptcy are unable to follow their repayment plans.

The advantage of filing Chapter 13 bankruptcy is that if you stick to your repayment play you may be able to refinance and/or sell your home. Remember, Chapter 13 bankruptcy is never a DIY project…if you are considering bankruptcy to avoid foreclosure you should consult a bankruptcy attorney to determine if Chapter 13 to stop foreclosure proceedings is right for you.

Is Refinancing Your Mortgage an Option?

Qualifying to refinance your mortgage means that you need sufficient income and credit to get a new mortgage loan. Refinancing your mortgage preserves your credit and allows you to keep your home. If you used a risky Adjustable Rate Mortgage and are concerned about the risk of payment shock when your lender adjusts your payment, refinancing could protect you. Keep in mind that refinancing your mortgage does not always result in a lower payment.

Suppose for example that you owe $150,000 on your home and refinance with a different mortgage lender. You will need to add your closing costs and broker fees to the balance of your existing loan to get the new mortgage. Rolling your closing costs and fees could result in a new mortgage balance of $157,000 or more. This could also result in a higher or similar mortgage payment even if you qualify for a lower mortgage rate. Keep in mind that if you are 60 or 90 days late on your mortgage payment refinancing may not be an option…this also true for homeowners with sub-prime mortgages or bad credit.

You can learn more about your mortgage refinancing options, including costly mistakes to avoid by registering for my free mortgage newsletter. Sign up today using the form in the upper left-hand corner of this page.