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Posted by Debra & John Blanchet on 2/14/2018

Credit is tied to most big financial decisions you will make in your life. From things as little as opening up a store card at the mall to buying your first home, your credit score is going to play a factor. When it comes to mortgages, lenders take your credit score, particularly your FICO score, into consideration in determining the interest rate that you will likely be stuck with for years. How is your credit score determined and what can you do to use it to get a better rate on your mortgage? We'll cover all of that and more in this article.

Deciphering credit scores

Most major lenders assign your credit score based on the information provided by three national credit bureaus: Equifax, Experian, and TransUnion. These companies report your credit history to FICO, who give you a score from 300 to 850 (850 being the best your score can get). When applying for a mortgage (or attempting to be pre-approved for a home loan), the lender you choose will weight several aspects to determine if they will lend money to you and under what terms they will lend you the money. Among these are your employment status, current salary, your savings and assets, and your credit score. Lenders use this data to attempt to determine how likely you are to pay off your debt. To be considered a "safe" person to lend money to it will require a combination of things, including good credit. What is good credit? Credit scores are based on five components:
  • 35%: your payment history
  • 30%: your debt amount
  • 15%: length of your credit history
  • 10%: types of credit you have used
  • 10%: recent credit inquiries (such as taking out new loans or opening new credit cards)
As you can see, paying your bills and loans on time each month is the key factor in determining your credit score. Also important, however, is keeping your total amount of debt low. Most aspects of your credit score are in your control. Only 10% of your score is determined by the length of your credit history (i.e., when you opened your first card or took out your first loan). To build your credit score, you'll need to focus on lowering your balances, making on-time payments, and giving yourself time to diversify your credit.

What does this mean for taking out mortgages?

A higher credit score will get you a lower interest rate. By the time you pay off your mortgage, just a hundred points on your credit score could save you thousands on your mortgage, and that's not including the money you might save by getting lower interest rates on other loans as well. If you would like to buy a home within the next few years, take this time to focus on building your credit score:
  • If you have high balances, do your best to lower them
  • If you have a tendency to miss payments, set recurring reminders in your phone to make sure you pay on time
  • If you don't have diverse credit, it could be a good time to take out a loan or open your first credit card
When it comes time to apply for a mortgage, you'll thank yourself for focusing more on your credit score.




Tags: Mortgage   credit score   loan   credit   home loan  
Categories: mortgage   credit score   loan   credit   home loan  


Posted by Debra & John Blanchet on 11/8/2017

Many Americans who purchased their home when they had lower credit, a shorter employment history, and less money stand to gain from refinancing their mortgages. However, most miss out on this opportunity or don’t realize it in time to save potentially thousands in interest payments.

According to recent data, 5.2 million Americans could save, on average, $215 per month if they refinanced their loan. But many homeowners are hesitant to refinance.

Whether it’s because of the inconvenience, the cost of refinancing, the worries about something going wrong, or uncertainty about whether they’ll actually save money if they go through the process, millions of homeowners are missing out.

So, in this article, we’re going to talk about some reasons it may be a good idea for you to refinance. If you’re one of the millions of Americans with a mortgage who are thinking about refinancing, this post is for you.

Riding the wave of the economy

Interest rates on home loans are historically low right now. As a result, homeowners can save by refinancing simply due to changing tides of the real estate market. Although mortgage rates have increased slightly over the past two years, they’re still on the low end, so this could be your last chance to save.

To consolidate your debt

Credit cards, auto loans, and other forms of debt can add up quickly. If you have a high-interest rate on your other debts, refinancing could be a good way to consolidate and save.

This can be achieved through a home equity loan or by refinancing with a cash-out option. This means you refinance your mortgage for more than you currently owe and take the remainder in cash to pay off your other debts with high-interest payments.

Typically, you need to have at least 20% equity (or have paid off 20% of your mortgage) to be eligible for this option.

Small percentages count for more now

It was once said that refinancing only made sense if you would receive a lower interest rate of at least 1-2%. However, with the prices of homes increasing over the years, sometimes even a small change, such as .75% is enough to save you substantial money on your repayment.

You’re able to repay early

One of the best ways to save on a home loan is by refinancing to a shorter term. Going from a 30-year loan to a 15-year loan can save you thousands. There are several calculators available for free online that will enable you to estimate how much you could save by refinancing to a 15-year mortgage.

You got a raise

One of the best times to refinance is when you can be certain that you can afford to pay off your loan sooner. As people progress in their career, it isn’t uncommon for them to refinance their loan so that they can spend more each month but save in the long run.

Since you have a higher income, and likely higher credit, you can also refinance a variable rate loan to lock in a lower fixed rate.






Posted by Debra & John Blanchet on 8/30/2017

Making the decision to buy your first home is a big step. One of the most uncertain parts that’s involved in buying a home is that of securing a first-time mortgage. You’ll need to know what types of programs exist to help you on your journey to homeownership. Even if you have owned a home in the past but are now renting your home, you may be eligible for first-time mortgage benefits. 


The first thing you should do is understand your options for getting a mortgage. The Department of Housing and Urban Development often provides you with agents to help you see whether you will, in fact, qualify for a first time mortgage and all the benefits that go along with it. They may also help you to see exactly what programs will work best for you. You can find agencies in your specific area on the HUD website. 


Each state and local municipality have its own resources for those seeking to buy a home as well. These programs may get more specific, helping low-income earners, first-time home buyers and people with disabilities. Of course, you’ll need to meet certain eligibility requirements before qualifying for the programs. Your state and local housing offices are other great places to start when you’re searching for benefits for first-time home buyers.   


Save, Save, Save! 


Even before you think you might be ready to buy a home, you need to start saving. You’ll need a significant down payment, especially if you’re hoping to avoid private mortgage insurance or PMI. If you can’t swing a 20% down payment, there’s good news: First-time home buyers are eligible for loans that require a lower down payment- as little as 3%! 


You’ll also need a significant amount of savings to pay upfront for closing costs. These fees can come in somewhere between 3 and 4% of the purchase price of the home. It won’t be very pleasant if your bank account is completely empty by the time you reach the closing table. This is why it’s a wise idea to save long before you even think you might want to buy a home.      



Look At Your Finances


In the same light of saving money, you’ll want to keep your financial health in check in order to prepare to secure your first mortgage. First, check your credit score and see where you stand. You can take the time to dispute any discrepancies you may find on your report. Then, start paying off any credit card balances that you may have. Remember that the higher your credit score is, the better your chances are of securing a mortgage and being approved for a first-time home buyer program.





Posted by Debra & John Blanchet on 6/22/2016

With mortgage rates at all time lows, you might be wondering if you should be considering refinancing your home. While it may seem like a great thing to do, there are a few things to consider before you decide. An obvious reason for refinancing to a lower interest rate is the monthly, and even more importantly the long term, savings you will get. Depending on the decrease in interest rate and the amount of the loan, you could see a savings of at least $50/month or $600/year or $6000/10 years. Refinancing to a shorter term loan can also help save on the interest you pay over the life of the loan so if you can afford a 15 year mortgage the benefits outweigh that of a 30 year. Some things to consider - If you have owned your home for a long time, your monthly payments are going more towards the principal of the loan, not the interest. Refinancing would cause you revert back to monthly payments of more interest than principal, losing the equity that you have built in your home. You may be charged for an appraisal on your home which can be around $500. The bank will want to make sure that you are refinancing for an amount your home is worth so some out of pocket expense is required. If you plan on moving in the next few years, refinancing may not be worth the amount you will pay in closing costs. There are several refinancing calculators available on the web including at http://www.zillow.com/mortgage-calculator/refinance-calculator/ and http://www.smartmoney.com/calculator/real-estate/should-i-refinance-my-mortgage-1302835660427/. No matter what you choose, being fully informed of all the options, costs and advantages/disadvantages is key to a successful refinance. Make sure you talk with you current lender, as well as other lenders to get the best refinance possible.




Tags: Mortgage   loans   refinancing  
Categories: Uncategorized  


Posted by Debra & John Blanchet on 1/27/2016

Getting a mortgage these days can be tough and it is even tougher for small-business owners. Potential self-employed borrowers usually have variability in their income streams. Today, banks are requiring more financial documentation from all buyers, and self-employed borrowers tend to face more scrutiny. Small-business owners may have a smaller income because they are typically knowledgeable about tax deductions and credits. This often reduces the amount of taxable income they have. Reducing the amount of taxable income on your tax returns means to the lender there is less income to qualify for a loan. There are ways self-employed borrowers can increase their chances of getting a home loan, however. Here are a few tips: What is the lenders history? Find out if the lender has a history of working with self-employed borrowers. Self-employed borrowers should focus more on finding a lender that will understand their situation rather than shop the loan rate. There are individual loan officers who will be able to think out of the box or come up with solutions. The lender you choose is key. Consider portfolio lenders. Portfolio lenders have more flexibility in originating loans because they don't have to sell the loan to Freddie Mac or Fannie Mae. Portfolio lenders hold their own loans. That makes a big difference in their ability to loan. Another option may to consider credit unions. Many credit unions also keep a good portion of loans on their books. Boost your income. Show you make as much money as possible on your tax return. You might need to amend your tax returns. Some lenders will look at a loan application again if they have sent in amended returns to the government. Sometimes by rethinking deductions and credits on income taxes, a borrower can increase his qualifying income. Of course, with this strategy, the borrower would also face a new tax bill.




Categories: Uncategorized  




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