17
Nov
By First Rate Financial Group
Mortgage

A Late Payment: Credit Score Impact

A Late Payment: Credit Sore ImpactThis has been a difficult year for everyone. There are a lot of people who are worried that they might not be able to keep up with their mortgage payments. Small businesses have had to close their doors and numerous individuals have been laid off from work.

It is important for homeowners to understand that banks do not want people to foreclose on their homes either. Therefore, they are often willing to work out an alternate payment plan with homeowners who are struggling due to dire financial situations. Those who are late on a mortgage payment might be wondering how this is going to impact their credit score. The answer is that it depends. 

How Does A FICO Credit Score Work? 

Someone’s credit score is a conglomeration of multiple factors including payment history, the amount of money owed, the length of the credit history,  and new credit. A late or missing mortgage payment is only going to impact one of these categories. Unfortunately, this also happens to be the largest factor, making up more than a third of the total credit score. 

A Late Mortgage Payment

First, it is important for everyone to know that a late payment is not going to impact someone’s credit score until it is late by more than a month. At the same time, people need to remember that the lender can still access a late fee. If someone has a high credit score with a long credit history, this late payment is not going to hurt as much. On the other hand, someone with a poor credit score and a short credit history might feel the sting a little bit more. 

Furthermore, it is important for people to note that a payment that is late by 60 or 90 days is going to hurt someone much more than a payment that is late by just one month. Therefore, even if a payment is going to be late, people should still try to pay it as early as possible.

Protect The Credit Score

It is important for everyone to try to do everything they can to protect their credit score. If they are worried they are not going to be able to make a mortgage payment, they should let the lender know and see what their options are.

 

29
Jul
By First Rate Financial Group
Home Buyer Tips

Three Ways That Your Credit Score Affects Your Mortgage and Your Chance of Obtaining One!

Three Ways That Your Credit Score Affects Your Mortgage (and Your Chance of Obtaining One!)If you’re thinking of buying a home, you’ve probably been thinking a lot about your credit score as well. Credit scores control so much of what we do in the world of finances, but what does your credit score really have to do with your mortgage? Here are three ways that your credit score could impact your mortgage application.

Your Credit Score Affects Your Ability To Get A Mortgage

The first thing your credit score tells a lender is whether they should lend to you at all. In some cases, if you have a very low credit score, you may not be able to obtain a mortgage at all.

Different lenders will have different criteria for determining safe and unsafe lending situations. Typically, if you have a score below the 600 mark, you’ll have trouble obtaining a mortgage.

If you’re worried about a low credit score, don’t despair – you can still get a mortgage, you just might have to work a little harder to get one. Some lenders will still lend to people with lower credit scores (just make sure you’re approaching legitimate lenders and not mortgage scam artists). Or, if time is on your side, you can work toward building up your credit score so that when it comes time to take out a mortgage, your score will be more appealing to lenders.

Your Credit Score Affects What Types Of Mortgages You Can Obtain

The second thing a lender learns from your credit score is which types of mortgages you qualify for. If a lender sees you as a higher risk, they won’t necessarily be willing to offer you just any old mortgage.

In most cases, if you have a credit score of less than 620, you won’t qualify for a conventional mortgage. In addition, if you have a lower credit score, you may have to make a larger down payment in order to qualify for the type of mortgage you want.

Your Credit Score Affects Your Interest Rate

The final thing that a lender learns from your credit score is what type of interest rate they’re willing to offer you. As a general rule, the higher your credit score, the lower the interest rate.

However, just because you have a high credit score, that doesn’t mean you’ll automatically get a great mortgage rate. There’s more that goes into the price of a mortgage than just the interest rate, so watch out for additional factors like extra fees, mortgage insurance, lock-in periods, and so on.

Your credit score tells a lender a lot about what type of borrower you are. Ultimately, a higher credit score means that you’ll be able to borrow money at a lower interest rate. But if your score is low, don’t worry – there’s a lot you can do to bring up that score before you apply for a mortgage, so don’t throw in the towel just yet!

Every financial situation is different, so if you want to find out more about how your credit score will affect your mortgage in your specific circumstance, talk to your mortgage professional.

27
Feb
By First Rate Financial Group
Mortgage

Find The Best Mortgage Deal With A Few Simple Steps

Find The Best Mortgage Deal With A Few Simple StepsCurrently, this is a great time to be in the market for a new home. The interest rates on mortgages have fallen countless times over the past few years. Even though interest rates have been in the double-digits in the past, there are homeowners today who are able to agree to a mortgage for less than three percent. 

Despite the low interest rates, it is still important to get the best possible deal. There are a few simple steps that everyone should follow to get the best mortgage deal possible.

Know How Much You Need

The first step is to figure out what type of mortgage is required. Some potential homeowners might be looking for a mortgage they can get with a small down payment. Other potential homeowners might be looking for a mortgage they can pay off quickly.

Remember, the goal is to eventually own the home outright. The goal is not to pay as much interest as possible. Therefore, try to figure out what type of loans are available. Then, decide which loan best matches the needs.

Know The Market

Next, it is important to know what the market is doing. First, consider what the market looks like on a national level. Where do the average interest rates currently sit? Are these interest rates for 15-year loans or 30-year loans? Are the interest rates for fixed-rate loans or adjustable-rate loans?

Then, know what the market looks like in the local area. What are some of the current mortgage rates for loans in the given area? This will give potential homeowners a decent idea of what the current market looks like.

Get The Credit Score In Order

In addition, it is critical to take steps to ensure the credit score is as solid as possible. Some people only check the credit score when it is time to take out a loan. Try to do this as early as possible. There might be errors on the credit report that can influence someone’s score.

The credit score is important because it gives the lender an idea of what someone’s financial history looks like. A higher credit score means the lender is taking on less risk. In this situation, the lender might be willing to lower the potential interest rate.

If you are in the market for a new home or interested in refinancing your current property, be sure to consult with your trusted home mortgage professional.