Home Mortgage Rates And Your Credit History
February 13, 2010 by · Leave a Comment
A borrowers record of various personal debt ie: credit cards, consumer debt, etc. and whether payments were made on time. Mortgage lenders will review the borrowers credit history to help determine their loan qualifications and the terms of the loan.
With recent changes to the laws concerning your credit report, you can now obtain a free annual credit report from each of the three major credit reporting bureaus. By using this free credit report to protect your good credit rating, or discover why your credit is bad, and you can ensure that you qualify for the best loan rates available.
Although identity theft is getting a lot of attention, credit reports are more likely to have inaccuracies that can cause problems. For example, an account may be reported as “paid”, but still show a balance due. Also, some small creditors are really good at reporting late payments, but not so good at reporting paid off accounts. Occasionally, a creditor will give an account to a collection company, and both will continue to report delinquencies, although only one is legally entitled to.
Correcting inaccuracies in your credit report is as important as looking for evidence of identity theft.
Having a good credit history means it will be easier for you to get loans and lower interest rates. Lower interest rates usually translate into smaller monthly payments.
As negative items in your credit history get older your credit will improve and your credit scores should increase. Your credit history plays the biggest role in determining your credit score and should not be taken lightly. Your credit payment history accounts for 30-40% of your entire credit score.
If you have a dispute in your credit history notify the consumer credit agencies. If the inaccuracy cannot be verified or is inaccurate, they are required to remove the information.
Your credit history plays an important part in determining the level of risk associated with lending you money. Borrowers whose credit history show timely payments and responsible use of credit are considered low risk. These borrowers receive the best rates and have more loan options available to them.
Your credit paying history is not the only factor that counts towards evaluating your credit worthiness. There are many factors that contribute to your credit ranking, including: debt service ratio’s, length of credit, new credit, credit inquires to just name a few.
Your credit history or lack there of will determine your credit score. If you have credit cards that are at there limits or multiple late payments on your credit report will lower your credit score and increase your interest rate when applying for a mortgage loan.
Before applying for a mortgage loan, it’s a good idea to order your own credit report to see if their are any errors that need to be disputed. Innacuracies on your report can drop your score significantly. You will pay for a lower credit score with a higher interest rate, which may cost you thousands of dollars in higher monthly mortgage payments over the life of the loan.
Improve Your Credit Score One Step at a Time
January 24, 2010 by · Leave a Comment
If you plan to apply for a mortgage or a loan in the future but you have had credit problems in the past then you need to improve your credit score before you can do anything else.
Your credit score is a very important number. Every time you apply for any kind of financial assistance a lender will take a look at your credit score. If you are approved for credit then the number will play a role in the terms of the loan and the interest rate.
A higher credit score is much more advantageous than is a lower one. If you have a lower score you may be approved for credit but you will have a higher interest rate because the lender considers you to be a high risk. This is one reason that you need to work as hard as possible to improve your credit score.
Before you can figure out how to improve your credit score it helps to understand what it is made up of. Your credit score is made up of five specific areas:
· Payment history makes up 35 percent
· Your debts make up 30 percent
· The length of your credit history accounts for 15 percent
· New credit makes up 10 percent
· The credit that you are using at present accounts for 10 percent
In order to improve your credit score one of the most important things you can do is to get into a habit of paying all of your bills on time. This is the most vital aspect that plays a role in your credit score. If you have any payment that is past due by 30 days or more then this can be a black mark on your credit rating. Negative marks such as this can show on your credit report for as long a period as seven years. Don’t let this happen to you. If you want to improve your credit score then pay all of your bills on time. Do not let a credit card bill or utility bill cause you problems with your credit.
The money you owe on any given debt makes a difference in your credit score. To improve your credit score do not live beyond your means. Do not overuse credit and do not borrow more money than you can afford to pay back in the allotted period of time.
If you presently have a great deal of debt then it would do you well to take steps to cut back on extravagant spending. To improve your credit score you must become responsible financially. Pay your bills in a timely way. Pull up your financial straps and improve your credit score. Take it one step at a time and you will find that you are making progress.
Bad Credit Mortgages
January 24, 2010 by · Leave a Comment
There are many programs available for individuals with bad credit. Typically, the interest rates are higher than other programs for people with good credit. A competent mortgage broker should be able to give you your options.
Many people have bad credit because they are simply over extended. They have have lower credit scores due to carrying heavy loads of debt and sometimes missing payments because they have so many monthly payments. By using your mortgage to consolidate debt, you can improve your credit score. In this case a bad credit mortgage actually becomes a tool to improve your credit score.
Banks assess default risks primarily by credit history, capability to repay the loan, and the amount in relation to the value of the property the home buyer puts towards the house. As long as one can demonstrate enough income and sufficient down payment, bad credit profile usually is not a problem getting a mortgage.
I think there are more lenders working on loans for people with less than perfect credit than for those with perfect credit…Probably because if you have perfect credit, you are the exception, not the rule…
Some people with bad credit count themselves out of the game before having their credit reviewed by a qualified mortgage professional. With the many sources mortgage brokers have available to them they may be able to get you the financing you want now rather than having to wait. The only way one can be sure of what is available for you is to have a mortgage broker consult with you abuot your credit situation and make recommendations as to what the best possible course of action might be.
If you have been told that you have bad credit, don’t think that you don’t have any options. People with bad credit typically have FICO scores which are 620 and below. Missed payments on credit cards, installment loans, mortgages, or any public records also affect credit in a negative manner.
Luckily, many mortgage professionals are affiliated with lenders who help individuals and families who have found themselves in a tight situation. These lenders present loan options which are very flexible and allow people to utilize their home’s equity as a compensating factor for their bad credit situation.
There are also loans available for people who have been delinquent on their mortgage payment. You may still qualify for a loan even if a notice of default has been filed on your property. Consult with your mortgage professional to review your options.
Many people are fed up with renting and feel that their credit situation is keeping them from a home loan. If you feel this way, you are definitely not alone. Thousands of individuals and families across the US think that they are stuck in a rental due to bad credit. The good news is that, in many of these cases, the individuals think that their situation is much worse that it truly is.
Lenders are getting more and more aggressive and coming up with new types of financing each year. This is allowing many Americans to be able to buy a home with no money down and even if they have bad credit. Consult your mortgage professional to find out what options you have and how much of a home you will qualify for. Even if you can not qualify for the financing you desire or require at this time, a good mortgage professional will be able to let you know what can be done in order to qualify for the financing you need in the near future.
If you are looking for a bad credit loan, your best bet is to talk to a mortgage broker, not a bank. Banks will almost certainly turn you down, whereas mortgage brokers have access to hundreds of lenders and can find some that would fit your circumstances.
Shop Wisely For A Home Mortgage Loan
January 23, 2010 by · Leave a Comment
When you shop for a home loan you want to get the very best deal that you can. Whether the home loan you are looking for takes the form of a mortgage for a first time homeowner, a home equity loan or a refinancing loan, there is always room for negotiation when it comes to the terms and the price.
Always remember when searching for a home loan that you must be shrewd. Make sure you shop around to a number of different places. As well, compare what different financial institutions have to offer for a home loan and then work your powers of negotiation. Shopping, comparing and negotiating are the name of the game when it comes to a home loan.
There are plenty of lenders from whom you can apply for a home loan. Besides the many commercial banks that exist, there are also credit unions, mortgage companies and thrift institutions (this is a savings and loan institution, or a depository institution that specializes in home loans and saving deposit accounts). Talk to lenders from a variety of places to get home loan quotes. Compare the quotes you are given from company to company in order to find the one that is most suitable for you.
Another option is to speak to a qualified mortgage brokers. A home loan can be arranged for you by this individual although the process is different than it is with banks. Brokers do not lend money for a home loan themselves but they set the transaction up for you. In other words, a broker can find an appropriate lender who can assist you in getting a home loan. The advantage of a mortgage broker is this person often has access to a multitude of lenders and this means that the selection of home loans available to you, as well as the terms, are much greater and leave more room for negotiation.
Be aware when you are shopping for a home loan that a mortgage broker is able to get in touch with a number of different lenders however he/she is not obligated in any way to guarantee you the best deal on a home loan unless you have decided to contract the broker to work as your agent. For this reason, it is wise for you to contact an assortment of mortgage brokers.
Some lenders employed at financial institutions also work as brokers but you will not know this unless you come right out and ask. When looking for the best deal for a home loan, it never hurts to find out if a person is both a lender and a broker. The reason for this is because mortgage brokers are often paid a fee that is separate from all of the other fees associated with a home loan. He or she may be paid what is known as points when the closing costs are completed, or you may have extra money added onto your interest rate for your home loan.
Compare Mortgage Rates After Bankruptcy
January 23, 2010 by · Leave a Comment
Not all creditors react the same way to bankruptcy, but your credit will be hurt. This does not mean that you will not be able to obtain credit. A mortgage professional can advise you on what credit you need to get a mortgage after bankruptcy.
It is a good idea to review your credit report after a bankruptcy. Some accounts that were included in your bankruptcy will still show up as active and delinquent which will hinder your scores from improving.
You can obtain a mortgage 1 day after a bankruptcy, assuming your credit score is where it needs to be.. It is a very good idea to get some small credit cards during your payoff period, even if secured cards to “re-establish” yourself.
Many credit card companies will send you applications after your bankruptcy. They know that most or all of your debt will have been eliminated. They also know you can’t declare bankruptcy again for several years. If they do approve you for a card the limit will be low and the rate will be high.
Some people are able to get a secured credit card after a bankruptcy. This means that the borrower would put up a certain amount of money (usually $250 or so)…and they would have a credit card with a $250 limit secured by this deposit.
It’s a great way to get your credit re-established after a bankruptcy.
It can be very difficult to repair your credit after filing a bankruptcy. It is usually best to have a game plan on credit repair prior to filing a bankruptcy.
When applying for a mortgage with a recent bankruptcy, your post-bankruptcy payment history is closely scrutinized. Lenders want to see that you have developed better spending habits since filing for bankruptcy. If you have numerous late payments since your bankruptcy the lender may deny your loan; if you have a perfect payment history since your bankruptcy the lender will look favorably on this and is more likely to consider your loan for approval.
