06
Nov
By support
Home Mortgage Tips

Did You Know That Your FICO Score Can Drastically Affect Your Mortgage? Here’s Why

Did You Know That Your FICO Score Can Drastically Affect Your Mortgage? Here's WhyAre you about to apply for a mortgage loan in order to buy a home? If so, you may be curious about your credit score and how this might impact your financing.

Let’s take a quick look at how FICO credit scores can affect your mortgage and share a couple of ways that you can boost your score to ensure your application is approved.

What is a FICO Score?

The Fair Isaac Corporation (FICO) is the country’s leading producer of credit scoring information and is the primary source that most lenders will check to assess how much risk you present. FICO combines information from credit bureaus such as TransUnion, Experian and Equifax and produces a score ranging from 300 to 850.

The higher your FICO score is, the better your credit history and the lower the risk you present to lenders. If you have a score above 750 you can expect that most lenders will offer you a mortgage and likely a very good interest rate. If you have a score below 620 or 630 you may find it challenging to get approved and below 500 it will be almost impossible.

How Does a FICO Score Affect My Mortgage?

Your FICO score will affect you in two main ways. First, as mentioned above your FICO score will help to determine whether or not you are approved for a mortgage. Second, you’ll find that the interest rates offered to you by various lenders will change based on your FICO score. An individual with a score of 800 and very clean credit presents much lower risk than someone with a score of 500, and thus a higher score generally means a lower rate.

How Can I Boost My FICO Score?

If you find that your credit score is a bit low and you’re concerned that it will have a negative effect on your mortgage application there are a few steps you can take. First, get a full copy of your FICO score and credit history so you can see who is reporting to the credit bureaus and what information they are providing. You may find that there are mistakes or old items that have not yet been removed which you can then challenge to have taken off of your credit report.

While your FICO score can certainly impact your mortgage and your interest rate you shouldn’t let a low score hold you back from applying. Contact your local mortgage professional today to discuss your options and to determine whether or not your credit will cause you to have any issues in securing a mortgage to pay for your new home.

05
Nov
By support
Home Mortgage Tips

You Ask, We Answer: What is a “Reverse Mortgage”?

You Ask, We Answer: What is a Reverse MortgageIf you’ve recently considered your options for taking some of the equity out of your home you may have heard about reverse mortgage loans. If you meet the requirements for a reverse mortgage it can be an excellent way to tap into the value of your home, freeing up that cash to be reinvested or used for other purposes.

In today’s blog post we’ll explore reverse mortgage loans, explaining how they work and whether or not you’re qualified to receive one.

How Does a Reverse Mortgage Work?

As the name implies, a reverse mortgage is the opposite of a traditional or “forward” mortgage in which you borrow a lump sum of money from a lender to buy a home, paying it back to them over time. With a “reverse” mortgage, instead of paying the lender you will receive money from them which does not have to be repaid until you are either no longer using that house or condo as your primary home or until you fail to meet the obligations of the mortgage contract.

Note that a reverse mortgage is still a loan, which means you will still be required to pay interest on it. As your loan balance increases with principal and interest each month the amount of equity you have in your home will decrease accordingly.

Do I Qualify for a Reverse Mortgage?

According to the federal Consumer Financial Protection Bureau, there are a number of requirements that you must meet in order to qualify for a reverse mortgage. You must be at least 62 years of age when you apply, the home you’re applying with must be your primary residence, and most or all of your outstanding mortgage debt on the home must be paid off.

If you still owe money on your original or second mortgage against the home note that part of the money from the reverse mortgage must be used to pay this debt off.

How Much Can I Borrow in a Reverse Mortgage?

Like any type of loan, the amount of money that you can receive with a reverse mortgage depends on a variety of factors. Your age, the value of your home, any outstanding mortgage debt, current interest rates and Federal Housing Administration requirements will all be taken into consideration when determining how much you will qualify for.

While a reverse mortgage isn’t terribly complex, there is certainly more to the process that can be covered in a single blog post. For more information, contact your local mortgage professional today and they can share the specifics of how you might qualify for a reverse mortgage and whether or not it’s your best option for making use of some of your home equity.

28
Oct
By support
Home Mortgage Tips

Buying a Home? 4 Steps You Can Take to Ensure You Start out with a Low Monthly Mortgage Payment

Buying a Home? 4 Steps You Can Take to Ensure You Start out with a Low Monthly Mortgage PaymentAre you thinking about buying a new house or condo? If so, you’ve likely given some thought to your mortgage and as to how you can pay as little as possible in order to own your new home.

Below we’ll share four easy steps that you can take to ensure you start out with an affordable monthly mortgage payment.

Make A Large Down Payment On Your Home

The easiest way to reduce your monthly payment is to invest as much as possible in your down payment. The less you have to borrow, the less you’ll be required to pay back.

If you can put a sizeable amount down on your home you’ll find that your monthly payments are going to be very manageable. You’ll also save a lot of money in interest.

Maintain A High Credit Score

When a lender assesses your financial history they’ll take an in-depth look at your credit score in order to determine how much risk you present to them. If you’ve kept a clean credit rating and have a high score, it’s likely that you will qualify for a lower interest rate than someone with a lower credit score – even if you both have the same monthly income.

Buy A Smaller, More Efficient Home

When you’ve made your short list of homes and you’re scheduling your viewings, ask yourself – do you need a home this big, or this expensive? If you can do with a smaller, more efficient home you can reduce the amount of mortgage financing that you require and this will in turn reduce the amount that you need to pay each month.

Consider A Longer Mortgage Term

Finally, if you need to reduce your monthly payment at any cost you can stretch out your mortgage repayment period by a few years. Note that while this can reduce your payment amount it will actually increase the total amount that you end up paying back as you’ll pay more in interest.

While the above are general tips for reducing your mortgage payment, it’s likely that there are other strategies that are unique to your financial situation. Contact your local mortgage professional at your convenience and they’ll be able to share insights that are relevant to your income, your credit and the price range you’re looking to buy into.