May 5, 2023 | Mortgage Tips
When you are looking for a mortgage for your home, your credit score is very important. Any potential lender will check your score and will use the number to assess your creditworthiness and the interest rate that they offer you.
The better your credit score the lower the mortgage interest rates will be available to you, as the lender will be able to see that you can handle credit well.
However, if you have a very bad credit score, it could be causing you to be offered high interest rates on your mortgage that could cost you thousands over the years.
Improving your credit score before searching for a mortgage will ensure that you get the best rate possible. But what can you do to improve your credit score?
Here are three tips that can help you improve your credit score and your mortgage loan:
Be Patient
Remember that improving your bad credit will be a little bit like losing weight. You might not see results right away but it is the long term benefit of your good habits that will make all the difference.
When it comes to all of the ways to improve your credit score, there are no quick-fixes and the best way to rebuild your credit is to be responsible over time.
Check Your Credit Report For Errors
If you don’t know precisely what your credit score currently is, the first step will be for you to obtain a credit report. You can request a free copy of your credit report and check it over carefully for errors. There might be an error on the report that is making your score appear worse than it should be.
Set Up Payment Reminders
If you have trouble remembering to make your credit payments by the due date, this can be one of the biggest negative factors bringing down your score. You can ask your bank to set up convenient reminders through the online banking portals so that you will receive an email or a text whenever your payments are due.
Your credit score is very important when looking for a Worcester County area home mortgage, as it will mean that you receive much better program options and interest rates. Keep these tips in mind so that you can enjoy the best rates possible on your mortgage.
For more tips on how to improve your prospects for the best mortgage, feel free to contact your local, trusted mortgage professional.
Sep 14, 2022 | Mortgage Tips
In these days of low interest rates, it can be a great idea to get into the real estate market and invest in a home. However, if you don’t have the funds saved up to buy a home outright, it may seem like more of a burden than it’s worth. The good news is that you might qualify for a mortgage loan, which tends to come with more favorable terms than a traditional bank loan. Here are three reasons why a mortgage might just be the best money you ever borrow.
Taking Advantage Of Low Interest
Interest rates have been relatively low for a number of years, which can be a definite financial boon when it comes to your monthly mortgage payment. Unfortunately, though, the predictions forecast that rates are on the rise and that means home ownership may be a more difficult dream in the coming years. If you’re interested in getting a home at a lower price with a better interest rate, it may be worth getting a short-term loan for the long-term gain.
Begin To Invest
It will certainly improve your financial outlook if you have a financial plan and a monthly budget you stick to, but few things will help your money grow like investing. Fortunately, real estate is still one of the best investments you can make in terms of helping your money grow and ensuring your future fiscal success. While stocks and mutual funds can be a bit topsy-turvy if you’re not knowledgeable about investing, real estate can be a more reliable asset that’s easier to understand.
Giving Up On Rent
When investing in a home, there are few things more rewarding than not having to pay rent anymore. Instead of effectively tossing away money each month that you’ll never see again, you will be able to see your equity grow in the home and property you purchase. Plus, this equity can be used as leverage for investment in another home. It also means that no matter the downturn in the market, you’ll have a solid investment in something.
You may not like the idea of borrowing money for your mortgage, but it can be a good fiscal choice with interest rates on the rise and the opportunity to say goodbye to rent forever. If you’re currently considering borrowing and are planning on buying a home in the near future, contact your trusted mortgage professional for more information.
Aug 15, 2019 | Home Financing Tips, Homeowner Tips, Mortgage Rates, Mortgage Tips
By Karla Lopez
Refinancing a mortgage means you are replacing your existing mortgage or mortgages with a new one that has different, and hopefully, better terms. This new mortgage will pay off your old mortgage loan, and then you become responsible for paying it off. But the question is, when exactly should you do it?
The straightforward answer is whenever you can save money on your current mortgage through refinancing; it’s worth exploring all year-round. Although the old rule of thumb says refinancing is useful if you can get at least one or two percent reduction on the interest rate you’re paying. But, it’s no longer the case now.
Here are the situations when refinancing makes sense.
Mortgage Rates are Going Down
A mortgage is subject to fluctuation because it can be affected by a variety of factors such as market movements, Debt statistics, inflation, U.S. Federal Reserve monetary policy, the economy, and global factors.
Once the mortgage rates nosedive, you’ll be able to save by securing an interest rate that’s lower than what your current loan has. This maneuver is called rate-and-term refinancing wherein you refinance your mortgage for one that usually has the same remaining term but with a lower interest rate.
Again, the traditional rule has it that it’s best to refinance if your rate is one or two percent lower than your existing rate. But in reality, every borrower has different needs and financial goals. A one percent interest rate less may help you save on a $2 million mortgage. However, it’s not going to do much for a $200,000 mortgage.
There are other costs that come with refinancing that are crucial whenever you decide to go its route.
Another situation wherein refinancing can be a good option is when interest rates are anticipated to fall continuously, and you have a fixed-rate mortgage. In such a case, you might consider turning to ARM (Adjustable-Rate Mortgage.)
With an ARM, the interest rate will change over time, typically in relation to an index, which makes it possible for your payments to go up and down. It will make more sense to convert to an ARM if you plan to move in a few years. It owes to the fact that you’re going to forgo the safety of a fixed-rate loan.
Take note also that your ARM will go up too if interest rates increase. Additionally, the initial rate you acquire with an ARM will be effective for a limited period which could range from one month up to five years or more.
The Value of Your Home Increases
Refinancing could be your lifeline if your home’s value has gone up, particularly if you’re still paying off other high-interest debts.
When you refinance, you get to take a new loan that’s bigger than your previous one. You will use this new mortgage to settle the first loan, then you’ll get the difference in cash. This system makes it an excellent alternative to a home equity loan.
For example, you took a $160,000 mortgage five years ago for a house worth $200,000 house. You also put a $40,000 down payment. After a series of regular payments, your debt on a mortgage has now reduced to $100,000. When the property market skyrockets, so do your home whose value now amounts to $250,000.
Since your home is more valuable, you can now refinance for more than $100,000, which is the current balance of your mortgage. If you can refinance for, say, $150,000, you can take home the $50,000 in cash and use it to pay your other debts or other expenditures like home improvement and so on.
It’s vital in every refinancing option to make sure that you will use the money wisely and not get into unsustainable debt. Take heed that it’s part of a loan, so need to repay it and the rest of your mortgage loan.
Further, be sure that you will not end up paying more in mortgage interest than the interest you will pay on any debt.
Your credit score is an essential factor in calculating your mortgage rate. Rules have it that you’ll get a lower interest rate if you have a good to excellent credit score.
For instance, if your FICO credit score lies within 660 up to 679 range and you have a 30-year fixed-rate mortgage of $150,000, you’ll pay 3.998% APR as per the myFICO Loan Savings Calculator (interest rate as of August 2019).
With this interest rate, you’ll pay $716 per month and $107,742 for the total interest to be paid for 30 years.
Now if your credit score is playing somewhere between 700 to 759 range, your estimated monthly payment will drop to $683. You could save $12,021 in interest over the life of the loan.
You Have an Adjustable-Rate Mortgage and Mortgage Rates Rise
If you currently have an ARM and If mortgage rates are increasing, you might want to convert to a fixed-rate mortgage or better yet, consider refinancing.
With an ARM, your rate will increase more than what you will pay with a fixed-rate mortgage. If you’re conscious about possible interest rate hikes in the future, converting to a fixed-rate mortgage or turning to refinance can give you some peace of mind.
Refinancing a mortgage will depend on several factors such as the current interest rates, the length of time you plan to live in your home, how long it will take for you to recuperate your closing costs, to name a few. Further, refinancing can be a wise decision if you do it when the situations mentioned above are at your disposal.
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Jul 10, 2017 | Mortgage Tips
Last week’s economic reports suggested that demand for homes is rising despite a jump in mortgage rates and rising home prices fueled by low inventories of homes for sale. Demand for homes rose by 1.40 percent as interest rates jumped after the 10-year Treasury rate rose by 10 basis points.
Construction spending was unchanged in May as compared to a -0.70 percent reading in April. Although builders express high confidence in housing market conditions, construction spending continued to lag behind spending levels based on builder confidence readings.
Home buyers received good news as major credit bureaus removed two key components from consumer credit reports. Fannie Mae and Freddie Mac raised the debt/to income ratio for home loans from 45 percent to 50 percent of gross income. This move was made to help would-be home buyers swamped with education debt. Doug Duncan, Fannie Mae’s chief economist, said that raising the debt to income ratio would not increase lender risk significantly.
Mortgage Rates, New Jobless Claims Rise
Mortgage rates rose last week. Freddie Mac reported that the average rate for a 30-year fixed rate mortgage rose eight basis points to 3.96 percent; the average rate for a 15-year fixed rate mortgage rose five basis points to 3.22 percent. The average rate for a 5/1 adjustable rate mortgage rose four basis points to 3.21 percent. Discount points averaged 0.60 percent for a 30-year fixed rate mortgage and held steady at 0.50 percent for 15-year fixed rate mortgages and 5/1 adjustable rate mortgages.
Jobless claims rose last week to 248,000 new claims from the prior week’s reading of 244,000 new claims, but this increase does not appear to be related to layoffs. Non-Farm Payrolls for June increased to 222,000 jobs added as compared to 180,000 jobs expected and May’s reading of 152,000 jobs added. Non-Farm Payrolls include public and private-sector jobs.
ADP Payrolls, which reports private-sector job growth, dipped in June to 158,000 jobs added as compared to 230,000 private-sector jobs added in June. Employers have repeatedly cited difficulty in finding skilled candidates for job openings, which makes it less likely that they’ll lay off employees who have needed skills. The national unemployment rate edged up in June with a reading of 4.40 percent against expectations of 4.30 percent and May’s reading of 4.30 percent.
What‘s Ahead
This week’s scheduled economic reports include testimony by Fed Chair Janet Yellen, readings on inflation and core inflation and retail sales. Mortgage rates and new jobless claims will be released along with a reading on consumer sentiment.
Oct 3, 2016 | Mortgage Tips
Last week’s economic releases included reports on new and pending home sales, S&P Case-Shiller Home Price Indices and regularly scheduled weekly reporting on mortgage rates and weekly jobless claims. Readings on consumer sentiment and confidence were also released.
New and Pending Home Sales Lower as Peak Sales Season Winds Down
August readings for new and pending home sales were lower than for July; analysts said that slim supplies of available homes and rising home prices contributed to slower home sales. Peak home sales typically occur during spring and summer. Homebuyers with school-aged children prefer to be settled into a new home when school starts in August and September.
According to the Commerce Department, new home sales achieved their second highest reading since the Great Recession. Although lower than July’s reading, August sales of new homes reached 609,000 on a seasonally-adjusted annual basis. Analysts expected a reading of 600,000 new home sales based on July’s reading of 659.000 new homes sold. August’s reading was 20.60 percent higher year-over-year. High demand for homes appears to be kicking home builders into higher gear as they strive to ease slim inventories of available homes.
The impact of short inventories of available homes was reflected in August’s reading for pending home sales. Home sales awaiting closing fell in August from July’s reading of +1.20 percent in July to 2.40 percent in August. The National Association of Realtors® said that home sales are declining due to very limited inventories of available homes. Rapidly rising home prices and strict mortgage qualification requirements also contributed to slipping sales. After home buyers sign a purchase contract, they are at the mercy of changing mortgage rates their ability to qualify for a mortgage. Pending home sales supply an indication of future closings and mortgage loans.
According to the S&P Case-Shiller 20-City Home Price Index for July, home price growth dipped from June’s seasonally adjusted annual rate of 5.10 percent to 5.00 percent. Slim inventories of homes for sale and high demand were again cited as primary reasons for slower home price growth. While demand is high, slim supplies of available homes can cause would-be buyers to postpone their home search until more homes are on the market.
Mortgage Rates Fall, New Jobless Claims Rise
Mortgage rates fell across the board last week according to Freddie Mac’s weekly survey of rates. The average rate for a 30-year fixed rate mortgage fell six basis points to 3.42 percent; the average rate for a 15-year fixed rate mortgage was four basis points lower at 2.72 percent. 5/1 adjustable rate mortgages had an average rate of 1.81 percent, which was one basis point lower than the previous week’s reading Discount points were also lower and averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.
New jobless claims rose last week to 254,000 claims, but new claims were lower than the expected reading of 259,000 new claims which was based on the prior week’s reading of 251,000 new jobless claims. New jobless claims have stayed below 270,000 new claims for three months for the first time since 1973.
In prepared testimony before the Financial Services Committee, Federal Reserve Chair Janet Yellen discussed problems facing two major banks and said the Fed’s goal was managing its regulatory stance to support financial stability.
September’s Consumer Confidence Index reading rose to 104.1, which exceeded analysts’ estimated reading of 99.3 and August’s reading of 101.1.
What’s Next
Next week’s scheduled economic reports include readings on construction spending and several labor-related releases including ADP Payrolls, Non-Farm Payrolls and the National Unemployment Rates. Weekly reports on mortgage rates and new jobless claims are set for release as usual.
Feb 26, 2016 | Mortgage Tips
With all the expenses that go into monthly living and the temptations that come along with life, saving money for the down payment on your new home can be quite a struggle for many people. If you’re having a hard time saving and are wondering what you can do to ensure a higher bank balance next month, here are a few things that may pose a risk to getting the home of your dreams.
Forgetting To Take Lunch
One of the things most likely to defeat your bank balance is the daily office trip to the deli or diner. Instead of opting for an easy but expensive $10.00 lunch, take a few minutes at the end of each day to put together a sandwich or salad so you don’t have to spend extra funds on your lunch break.
Relying On Cable Television
With all the available options for streaming services, many people are switching out their packages for something a lot more economical. Cable can easily add up to $100.00 a month to your expenses, but a streaming service may only be a fraction of the cost and will provide savings you’ll soon notice.
Splurging On Morning Coffee
Grabbing the familiar cup of joe on the way to the office is certainly a way to ease yourself into the day, but one coffee can add up to a huge expense by the end of the month. If this is a vice you crave, try taking your own coffee to work and opt for a treat once a week if you really can’t resist.
Impulse Buys At The Grocery Store
Food certainly counts as a necessity, but there are many things that end up in the grocery cart at the end of a shopping trip that aren’t really staple items. If your cart is filling up with chips and chocolate, you might want to stick to your list or review your cart before the final purchase.
Avoiding Your Budget
Unless you’re taking to a spreadsheet to balance out your expenses and earnings, you may not see any significant savings at the end of each month. Budgeting will give you a better idea of what you can and can’t afford consistently, so make sure you’re writing everything down.
The idea of cutting back on spending is rarely a popular one, but there are things you can do every day that will make for a better bank balance at the end of the month. If you’re looking for more tips on buying your own home, contact your trusted mortgage professional today!
