26
Apr
By support
Home Mortgage Tips

You Ask, We Answer: 5 Ways That You Can Proactively Build and Improve Your Credit Score

You Ask, We Answer: 5 Ways That You Can Proactively Build and Improve Your Credit ScoreIf you’re planning to buy a house or take out a business loan in the near future, you’ll want to work hard to boost your credit score well ahead of time in order to improve your likelihood of getting the loan you need. A great credit score can also make you more desirable to employers and help you to negotiate lower car insurance rates.

But what can you do in order to build your credit score over time? What are the best strategies for boosting that score as high as possible? Here’s what you need to know.

Dispute Errors On Your Credit Report

According to the FTC, 25% of Americans have significant errors on their credit report. Whether it’s a fully paid debt erroneously reported as still owing or even another consumer’s debt listed on your credit report, these errors can be costly. That’s why you’ll want to regularly review your report for inaccuracies.

If you find any inaccuracies, you can dispute them and have them removed from your credit report – which will increase your score.

Negotiate Your Debts Owing With Creditors

If you owe money to creditors and are past due on the balance, chances are they’ve reported the debt to the credit reporting agencies – and it’s on your credit report. The fastest way to have the debt removed from your credit report is to negotiate with your creditors for its removal. Get your lender to agree in writing that they’ll report the account as “paid as agreed” if you pay the balance.

Keep Your Credit Utilization Ratio Low

Credit utilization refers to the percentage of available credit you use at any given time. So if you have $1,000 in credit available to you and you use $500, that’s a utilization ratio of 50%.

Generally speaking, it’s best to keep your utilization ratio below 30%. If you’re constantly using a high amount of credit, lenders will assume you’re not a responsible borrower.

Pay What You Owe On Time

Paying your bills on time is one of the best ways to build your credit score. Your payment history accounts for 35% of your credit score, so if you pay your bills on time and in full every month, your credit score will increase.

Make More Than One Payment Every Month

Using a large amount of credit at any given time doesn’t look good on a credit report. By making multiple payments every month, you’ll lower the amount owing that gets reported to the credit bureau and increase your score.

Building a credit score is a lifelong skill, which is why you’ll want to learn it early. Contact your local trusted mortgage professional to learn more about credit scores and mortgage finances.

19
Apr
By support
Home Mortgage Tips

Understanding the CFPB’s New Mortgage Rules and How They Might Affect You

Understanding the CFPB's New Mortgage Rules and How They Might Affect YouIf you’re getting a mortgage, you’ll want to ensure you’re well versed in all of the government regulations surrounding mortgages and how they affect you. One government agency that dictates a number of the rules surrounding mortgages is the Consumer Financial Protection Bureau. The CFPB has several regulations that lenders need to follow, some of which have only recently come into effect.

So how do the CFPB’s new mortgage rules affect you? Here’s what you need to know.

Know Before You Owe: Mortgages Just Got Easier To Understand

The CFPB’s new Know Before You Owe mortgage disclosure rule has rolled four previous forms into two. You’ll now receive your Loan Estimate and Closing Disclosure documents when you are about to close on a mortgage, making it easier to understand what exactly is in your mortgage. The new law also requires lenders to give you three business days to review your Closing Disclosure and pose questions before you sign the closing paperwork.

These forms are also standardized across the country – they are now shorter and written in simpler language, and all lenders are required to use the same forms. The forms must clearly state what your closing costs will be and what your monthly payment will be throughout the term of the loan.

More Power For Borrowers Who Are Behind On Payments

For decades, the mortgage system worked like this: If you run into trouble with your mortgage and find yourself behind on payments, your lender can foreclose on your home. But now, new rules state that lenders must take certain steps before they start the foreclosure process. Lenders must reach out to borrowers who are struggling and provide them with the opportunity to make a payment or work out an alternative arrangement.

The lender doesn’t have to give the borrower options that aren’t available, but if there is a non-foreclosure option on the table, the lender is now legally obligated to pursue it.

Mortgage Providers Will Need To Be More Transparent

The new rules also make the mortgage system much more transparent.

Under the new law, your lender is legally obligated to give you a mortgage statement with all of the information about your monthly payment in one place. If you run into trouble with payments, your lender is obligated to assign an employee to track your documents, answer your questions, and guide you through your options. There will be no more surprise foreclosures, no more administrative red tape, and no more debt traps.

Getting a mortgage is a complicated endeavor, and the new rules that have come into effect are designed to simplify the process. Contact a mortgage professional near you today to learn more about how mortgages work.

15
Apr
By support
Home Mortgage Tips

How to Determine the Right Mortgage for You: The Pros and Cons of Each Type

How to Determine the Right Mortgage for You: The Pros and Cons of Each TypeFinding the right mortgage can be a struggle. There’s a wide array of mortgage products on the market, and you don’t always need to get a mortgage through your bank – and with so many options, it’s hard to know which one is your best bet.

Your ideal mortgage will depend on your own individual financial situation, but when you understand how different kinds of mortgages work, it’s easier to choose the right one. Here’s what you need to know about mortgage types.

Fixed-Rate Mortgages: Home Financing At A Guaranteed Rate

A fixed-rate mortgage is exactly what it sounds like: A mortgage with a fixed interest rate. With a fixed-rate mortgage, your interest rate is locked for the life of the mortgage loan and cannot change.

When interest rates are at historical lows, a fixed-rate mortgage is an ideal financing option. By purchasing a fixed-rate mortgage at a low interest rate, buyers lock in low payments and are protected from sudden rate increases. However, fixed-rate mortgages are more difficult to qualify for when interest rates are high.

Variable-Rate Mortgages: Lower Rates And Larger Loans

A variable-rate mortgage is a mortgage wherein the interest rate fluctuates over time. Typically, the interest rate will stay constant during a set period of time near the start of the mortgage, and then start to vary. These mortgage rates rise and fall in line with the prime lending rate or one of the financial indeces like Treasury Bills or the LIBOR.

The major advantage of a variable-rate mortgage is that its lower initial rates and payments allow buyers to qualify for larger homes. Buyers can also take advantage of falling interest rates without having to refinance. However, variable-rate mortgages can quickly become expensive if interest rates see a sharp rise – and while some mortgages put caps on the maximum annual increase, these caps may not apply to the first rate change.

Interest-Only Jumbo Mortgages: Flexible Terms For Wealthy Buyers

An interest-only jumbo mortgage is a specialty mortgage designed specifically for wealthy buyers purchasing luxury homes. The major advantage of this kind of mortgage is that borrowers can make interest-only payments for the first 10 years of the loan. A possible downside is that interest-only payments purposefully never pay down any portion of the principal balance of the mortgage. For this reason, interest-only mortgages are typically only available to well-heeled buyers who can afford a hefty down payment and prove that they have large cash reserves.

Finding the right mortgage can be a challenge. That’s why it helps to consult with a mortgage advisor who understands the terms and rates, and can negotiate a great deal for you. For more information or to apply for a mortgage today, contact your trusted mortgage professional.