If you’re preparing to buy a house, you’re probably taking a good, long look at your credit history – or perhaps lack thereof.
One of the most frequent questions our mortgage bankers are asked by customers is how to improve their credit.
If you want to take your credit score to the next level, whether your score is in the pits or you wish to up your buying power for the house you’re saving for – here are the five things Daniel Bortz from trulia says you should avoid with your credit:
If you’re seeking a home loan but having credit woes, you’re not alone! Understanding and striving towards a better credit situation is a path shared by many Americans, as evidenced by a recent Experian survey.
Student loan debt is a hurdle facing many millennials as they become interested in becoming first-time homebuyers. But is it a hurdle that can’t be overcome? Here’s the skinny on student loan debt and mortgages.
If you’re buying a home or looking to make some energy efficient upgrades (which we’ve mentioned earlier this week as being one way to save big on your taxes) take extra consideration when investing in a water heater.
With taxes still on your mind, it’s never too early to consider how to lower your tax bill for next year. If you’ve got plans to renovate your home or even buy a home that you intend to make improvements to, you could have tax deductions or credits in your future!
There are many ways that you can protect yourself from identity theft, but two of the easiest ways are to securely dispose of and store your documents.
Documents you should always shred:
- Any document with your bank account number or credit card number
- Prescreened credit card offers
- Voided checks
- Expired or closed bank or credit cards
- All bills and statements
- Insurance documents
In addition to shredding all of the above named documents, you should also be mindful of the documents that you carry with you outside of your home. Unless you are going somewhere that you need the following documents, they should always be left at home: additional credit cards, checkbooks, social security card, passport, birth certificate or other identifying information other than your driver’s license. Make sure that you leave the items in a secure place in your home, or get a safety deposit box at your bank so that you can securely store them there.
By following these simple steps, you can help secure your identity and personal credit information.
For many first time home buyers, some of the biggest questions about buying their first home, revolve around how much their mortgage will cost. Not necessarily the mortgage itself, but the fees and costs associated with procuring the loan. Closing costs, escrow costs and down payment percentages are usually the biggest costs that borrowers worry about when getting a mortgage. Fortunately, closing costs and escrow costs are detailed in the GFE – a document that estimates the closing costs well before closing.
For individuals without any credit, securing a mortgage loan can be nearly impossible. Most of us know that a mortgage approval is based on several different factors, however, the largest factor is your credit – or more specifically, your FICO credit score.
Currently, FICO scores pulled from Equifax, Experian, and TransUnion are the only reports to measure a potential borrower’s credit worthiness.
But there’s a problem with that – some would be borrowers have so little credit that they don’t even have a FICO score at all, and because of that, some borrowers are turned down for mortgages.
However, all of this may be changing soon, according to an announcement by HUD Secretary Julian Castro and NAR President Chris Polychron earlier this month. According to the two industry specialists, the agencies are exploring alternative credit systems in an effort to expand American’s access to mortgages.
This announcement falls in line with last year’s statement by VantageScore – an alternative scoring system – that Fannie Mae and Freddie Mac, the two government loan agencies, were looking into updating their credit scoring methods.
Though it has not yet been confirmed that VantageScore will be used along with or in place of FICO scoring, this new development – if utilized – could work to change the game for many borrowers – 7.6 million borrowers to be specific.
Down payment requirements can be very intimidating, and trying to save for a 20% down payment can seem impossible. Luckily, the secret is out – you don’t actually need to have 20% for a down payment. Because, really, who has an extra 20 or 40 grand lying around?
Here are your options:
Go for an FHA loan – FHA loans, or Federal Housing Administration loans, are not actually funded through the FHA, they are simply ensured by the FHA. The FHA insurance covers the lender in the event that a borrower should default, and because of that, these loans are considered less risky for lenders. The FHA loan comes with a low interest rate and as little as a 3.5% down payment.
Check out a USDA loan – USDA loans are issued through the U.S. Department of Agriculture and are great for borrowers who are unable to save for a down payment because they require NO money down. Yes, that’s right. These loans offer 100% financing. What’s the catch? Well, there is none really. Though borrowers must meet location and income requirements, the location requirements expand much further than the countryside. In fact, some suburbs that surround cities fall within the limits.
Try a contingency – This is only applicable to those who are already home owners. Essentially, a contingency is a clause in your contract that states that a percentage of the equity in your current home, will go toward the down payment of your new home, contingent upon your first home’s sale.
Are you a veteran? The VA loan allows veterans and qualifying spouses to get a 0% down mortgage.
Even if you can’t come up with a down payment, you do have options, and you can still purchase a home. If you’re interested in purchasing your first home, check out our First Time Home Buyer’s Study Guide to learn about the process.
Questions? Call a mortgage banker at 1 (888) 914-2276.