4 Things Not To Do When Buying A Home

May 6, 2020 by

4 Things Not To Do When Buying A HomeThere is a long list of things that people need to do when they are looking to buy a home; however, it is also important for people to know what to avoid as this process unfolds. There is a lot for people to remember and it is easy for people to get carried away when they start looking at their dream homes. Even though it is great to look at a bunch of houses and imagine living there, it is critical for people to stay grounded and know what to avoid.

Do Not Make Any Large Purchases During The Home Buying Process

One of the biggest mistakes people make when they are looking at buying a home is they open their wallets too big. If people end up taking on other big purchases, they end up accruing more debt. This is going to mess up their debt to income ratio and will make it harder for people to qualify for a home loan. Therefore, try to avoid making any other large purchases during the home buying process.

Do Not Take Out Multiple Credit Inquiries

While this might not sound real, the truth sometimes hurts. The more times people pull their credit report, the worse it looks. Therefore, by making multiple credit inquiries, people could actually hurt their credit score. It is important for people to pull their credit score at least once to fix any inaccuracies that might be present; however, people should not get carried away.

Do Not Skip The Pre-Qualification Process

Many people want to avoid filling out excess paperwork; however, the pre-qualification process is a good idea. When someone pre-qualifies for a mortgage, they get a budget ahead of time and immediately look like a serious buyer. This means that their offer looks more competitive to a potential seller. Finally, the pre-qualification process could also help someone qualify for a lower interest rate.

Do Not Be Anxious

The process of buying a home can be stressful even for those who have been through it before. Just remember to ask questions along the way and individuals will be set up for success. There are trained professionals who are willing to lend a helping hand to those in need.  

Filed Under: Mortgage Tagged With: , ,

3 Questions to Ask Before You Buy Your First Home

March 19, 2019 by

3 Questions to Ask Before You Buy Your First HomeHunting for your new home can be a confusing process. There are countless factors you need to take into account to ensure your new location fits your family’s lifestyle and preferences. In their excitement, first-time home buyers can easily overlook some essential points about their potential property.

When you’re searching for your new residence, ask these questions to get exactly what you’re looking for.

Am I Financially Ready For A New Home Purchase?

It takes more than money to find the right home. Your credit rating is an important factor in your ability to secure enough funding to finance your dream. Check out your credit score before you buy to make sure you won’t have to settle for less.

Some of the things you have the greatest control over include:

  • Payment history
  • Credit utilization ratio
  • Debt-to-income ratio

Even with a large down payment, having a questionable credit history can endanger your chances of qualifying for mortgage loans. Spend some time shining up your credit report for the best results. Getting a pre-approved home loan is a great way to find out how much house you can afford before you start shopping.

Is This The Right Neighborhood For Me?

No matter how beautiful the structure itself is, your house won’t seem like a home unless you’re comfortable with the surrounding neighborhood. Take a walk around your potential block to assess the area and compare it to your needs.

  • For families with children, are there high-quality schools in the area?
  • Do your neighbors’ homes seem well-kept?
  • What amenities (dry cleaner, grocery stores, parks, etc) do you want in your community?
  • How do the roads and sidewalks look?

Before committing to a purchase, visit the home at different times of the day to get an idea of what you might have to live with.

Am I Ready To Settle Down?

Align your home purchase with your future goals. If you know you’re planning to move out-of-state in the next several years, take that into account when shopping for a home. Will you be able to sell quickly enough before you leave? Or do you plan to retain ownership of the home and rent it out while you’re away?

Think about the directions your life might take in the next 5 to 10 years. By looking ahead, you can make a better plan for the best home you can afford which will accommodate you and your family in the years to come.

Buying your first home is a major decision. Knowing your goals, desires, and abilities before agreeing to a purchase a home will make you the most comfortable moving forward.

One of the best partners in your home purchase process will be your trusted mortgage professional. Be sure to make contact as soon as you are considering a new home purchase to start the pre-approval process.

Filed Under: Real Estate Tagged With: , ,

Top Uses Of A HELOC

July 5, 2018 by

Top Uses Of A HELOCHomeowners who have equity built up in their homes can tap into that equity using a home equity line of credit, or HELOC. This financial tool can be a great way to accomplish a number of financial goals.

Here are four excellent uses of a HELOC for homeowners to consider.

Consolidating Costly Debts

Credit card debt and other types of consumer loans are costly, unless a debtor is lucky enough to have a no-interest card. Borrowers can consolidate that debt into a HELOC, which is much more affordable because it is a secured debt.

This advantage only works if the borrower stops adding to the debt problem. A HELOC becomes a valuable tool to get rid of debt quickly when used properly.

Create An Emergency Fund

Most people do not intend to end up in credit trouble, but emergencies happen. Emergency home repairs, job loss, or car repairs can quickly add up to unwanted debt.

A HELOC provides homeowners the option to have an emergency fund. Should one of these emergencies pop up, the homeowner can use the HELOC for an affordable source of funds.

Home Repairs That Add Value

Some home repairs add value to the property, but are also expensive. A HELOC can provide a source to fund these repairs. Because they put value back into the property, homeowners may be making wise use of their equity when using the HELOC in this way.

To make this work well, homeowners should choose repairs that do add to the home’s value. Since the cost of the repairs comes from the equity, the home’s owner should recoup the costs later when selling the home.

Funds For Investing

Finally, homeowners can use funds from a HELOC to get started in investment. This is risky, because the loan is paid regardless of how successful the investment is, but it can give a homeowner the chance to start investing for the first time.

Similarly, retirees can sometimes use HELOC funds to supplement retirement income if investments are struggling. This is a temporary solution to give investments a chance to recover, but for those living on a fixed income it is very helpful to have this option.

The HELOC is a valuable tool for homeowners that allows them to tap equity when it is needed. Since they have spent years building up this equity, homeowners should not fear using it when it can help with their financial goals.

Contact your trusted loan professional to find out if a HELOC may be right for you. 

Filed Under: Mortgage Tagged With: , ,

5 Key Factors That Affect Your Mortgage Rate

May 1, 2018 by

5 Key Factors That Affect Your Mortgage RateMany first time home buyers often wonder what factors determine their mortgage rate. Is it their credit score? Is it the type of loan chosen? Is it the size of the loan?

The truth is, there are many factors at play. Mortgage interest rates are not standardized across the board, so they vary from lender to lender and from borrower to borrower.

Here are 5 common factors that determine or affect your mortgage interest rate:

1.    Default Risk

Risk is a key consideration when determining mortgage interest rates. Banks and other lenders are in a risky business because there is always a chance of a borrower defaulting on their loan repayments. This is known as default risk. 

Banks and lenders therefore charge riskier borrowers higher interest rates to discourage them from borrowing, as well as to be able to average their returns between risky and non-risky borrowers. Risk is one of the prime factors that influence your mortgage rate.

2.    Credit Score

Perhaps you are wondering how banks and other lenders determine if you are a risky or non-risky borrower. There are many tools they can use, but your credit score plays a big role. You credit score is based on the borrowing history in your credit report, which summarizes all details about your credit card balances and timely bill repayment. 

If you pay your bills on time and sustain relatively low credit scores, your credit score stays high and lenders view you as a low-risk borrower. Consequently, your mortgage interest rates tend to be lower than a person with a low credit score.

3.    Type of Property You Are Purchasing

Some properties have a higher risk of default compared to others. This is determined by analyzing the historical likelihood of default on different properties; lenders use this analysis as the reason to charge higher mortgage interest rates on riskier ones. 

For example, vacation homes tend to have a higher rate of default compared to single-family homes and lenders charge higher rates for such homes. 

4.    Size of Down Payment

The amount of money you pay upfront on the mortgage also influences its interest rate. A large down payment gives you a lower LTV ratio (loan-to-value), which also decreases the level of risk borne by a lender. A small down payment, on the other hand, gives you a high LTV ratio and thus a higher mortgage interest rate.

5.    Loan Amount

A large loan bears a higher risk than a smaller one simply because there is more money at risk. Most lenders therefore charge higher interest rates on large property loans as compared to smaller ones.

All in all, different lenders offer different rates depending on their style of operation, appetite for risk, or competitiveness in the market. It’s important to search intensively for offers from different lenders for the best mortgage rate. Contact your mortgage professional to help you find out more about mortgage rates and what that means for your next home purchase.

 

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The Magic Number: Does Your Credit Score Need To Be Above 800 To Apply For A Mortgage?

May 8, 2014 by

The Magic Number: Does Your Credit Score Need to Be Above 800 to Apply for a Mortgage?Over the course of a lifetime, financial development can lead to some wonderful opportunities. A person’s financial development and state of affairs is something that is particularly important when it comes to taking out a bank loan to further progress in life, and the largest loan most people will require is a mortgage for a home purchase.

Since the process of getting approved for a mortgage is heavily dependent on credit history and that three-digit credit score that reflects reliability as a borrower, you should always put forth practices to keep that number healthy and growing.

However, how much importance does a credit score hold? Does that magic, three-digit number need to be above 800 in order to get approved for a mortgage?

The FICO Score: The Magic Number That Counts

When you apply for a mortgage, you will have to provide certain information to your financial institution or mortgage broker. The mortgage specialist at your bank or mortgage broker will then pull your credit score and your credit report.

Fair, Isaac and Company is the scorekeeper of your FICO score, which ranges from 300 to 850, 850 being the highest of all scores, and 300 being the lowest.

Every person in the United States has three FICO scores from the three different credit-reporting bureaus. Up to 80 percent of financial lenders will use a borrower’s FICO score in order to approve a mortgage application and determine a suitable interest rate on the loan.

The 600 Range: Fair And Good Credit Mortgage Options

If your credit score isn’t perfect (ie. above the 800 mark), you need not worry too much. There are many options available for those with credit scores around 600, and, with many different financial lenders to consider, having a mortgage approved sometimes means persisting with an application to several different lenders before receiving a “yes.”

With a “fair” and “good” credit rating falling between 620 and 719, there are options available to get approved for a mortgage well under the perfect 800 mark.  An FHA loan is a type of mortgage loan that is insured by the US Federal Housing Administration, offering an option with more flexible qualification measures. For homebuyers with a credit score above 620, this is a viable and common option.

720 To Perfect: Under 800 And Still In Great Shape

The median credit score in the United States is 723, and anything above 720 is placed with the marker of “excellent credit.” Therefore, just because you may range just slightly above 720, which may feel miles away from a perfect 800, you’re likely in just as good of shape when it comes to getting approved for a mortgage. You can expect a mortgage approval with good interest rates if you have a credit score higher than 720.

Keeping an eye on your credit rating and understanding the measures that are used in determining your credit score will certainly help you maintain a good score. Of course, speaking with a professional and receiving expert advice is always recommended. For specified information on your particular situation, contact your mortgage professional to discuss your options for receiving a mortgage loan.

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Got Student Loans? Tips for Graduating Debt Free

November 19, 2011 by

Going to a university or college can be a great opportunity to obtain the education and qualifications you need to pursue the career of your dreams. However, many students find themselves under huge mountains of student debt after graduating, which will take years to pay back.

Taking out student loans to go to college is not always necessary, and with a little foresight, hard student loan debtwork, and ingenuity you can get through your degree without having debt cast a shadow over your life. Here are some tips for graduating debt free:

  • Don’t go to school right away. If you spend a year or two working full time and saving first, you will have a nest egg to support you while you study rather than taking out a loan for it. You will also have more time to gain life experience, think about what you want to study and choose the best program for you.
  • Use the summer time when you are not studying to make as much money as possible. Work a full time job and take on extra hours if you can. In the school year, work part time alongside your schooling.
  • Apply for as many scholarships as possible. There are many to choose from and they can reward huge amounts of money to students. Not all scholarships are entirely based on academics, so even if your grades are not perfect you can still apply.
  • If it is possible to live at home with your parents during your degree, this will save you a lot of money and really help you get through your education debt free. If not, try finding the cheapest apartment or on campus accommodation you can and sharing it with a roommate. It’s not the ideal living situation, but you can have your own apartment in a few years when you are working and can actually afford it!
  • Anytime you get an unexpected windfall, such as birthday money, or prize winnings don’t think of the money as extra but use it to pay for your education instead.
  • Buy only what you need, and buy it as cheaply as possible. When you are decorating your university dorm room, you don’t need brand new furniture when a used desk you found on Craigslist for $15 will work just as well. Buy only the essentials, and try to find them used rather than new so that you will spend less money.
  • Many of your friends will be flashing their designer clothes and brand new laptops, and going out on the town every weekend. It can be difficult to resist wanting to fit in, but it’s important to remember that these students are either being funded completely by their parents, or spending student loans foolishly that they will need to pay back. You might feel like you are missing out as a student, but you will be much richer later as a result.
  • Find free or cheap ways to entertain yourself, so that you don’t spend a lot of money on expensive recreational activities. Go for walks, make dinner and watch a movie at home with friends, or go out on 2 for 1 drinks night at your local bar. The fun part is hanging out with friends, not spending a lot.

These are just a few things that you can do which will help you graduate without a huge student debt.

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