How much credit card use can effect your credit score
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Saint Paul, MN: A sharp spike in mortgage rates since the Presidential election is showing minor signs of hurting home sales.
Mortgage interest rates have jumped from around 3.625% for the weeks leading up to the election, and now are averaging about 4.125% for the best clients on a standard 30-yr fixed rate loan.
This quick jump does psycological damage for anyone currently in the market who were initially quoted the lower rates. But most buyers are not going to stop looking over this rate increase, as they generally are able to financially handle this quick jump.
The loan payment on a $200,000 home at 3.625% for 30-years is $912.10 a month, but at 4.125%, the payment is now $969.30 a month, or $57.20 per month more.
Another way of looking at it, is that with the slightly higher rate, a person would need to have a $190,000 to keep the same payment as the $200,000 loan they could have gotten a few weeks ago.
The rate jump has motivated many buyers to act now, especially as predictions are for rates to move a bit higher, before leveling off again. Of course no one knows for sure, but assuming rates will go a bit higher is the smarter assumption.
First time home buyers will generally be the ones most concerned and most effected by rate increases, but should be reminded that while rates are up slightly from just a month ago, from an historical standpoint, current mortgage rates are still some of the best ever in history!
Interest rates post Trump election have surprised just about everyone.
It’s been a long time since anyone lender was quoting conventional conforming 30-yr fixed mortgage rates at 4% or higher for their best customers, but as of yesterday, every mortgage lender is doing so.
What a difference a week makes, last Monday, the day before the election, rates averaged 3.625%. Over the past 3 days business day (Friday the markets were closed for Veterans Day), rates have moved higher and faster than the last big 3-day move back in 1987, where rates moved higher more quickly on an outright basis.
If you were on the fence for a refinance. You just lost, and should seriously consider locking now if it even remotely still makes sense.
If you were in the market to buy a house, rates are still great, and there is no reason not to buy a home. But consider the average $230,000 home here in Minnesota will cost you $50 more per month at a 4.00% rate versus a 3.625% rate.
There are a lot of factors, but the biggest is simply the markets are feeling good about the direction of the country with the Donald Trump election. This has sparked the stock market, which has seen very nice gains. When stocks are good, mortgage rates are bad. When stocks are bad, mortgage rates are good.
As a Loan Officer serving Minnesota, Wisconsin, and South Dakota, I am constantly asked why is there so much paperwork required to get a mortgage loan today. It seems that the lender wants to know everything about you these days, and you would be correct. Your mortgage lender does want to know a lot about you. If you were to give a complete stranger a huge loan, for a 30-year commitment, what would YOU want to know about them?
To make it feel worse than it really is, from about 1999 until 2007 during the housing boom, there were many programs available that allowed for limited documentation, or even no proof of income. Many people took advantage of those programs. Unfortunately, a large number of those people were allowed to bite off more loan than they would have been allowed if they proved income, contributing to the real estate collapse starting in 2007.
No one wants foreclosures and bad loans. It isn’t good for the home buyer, the neighborhood, or the economy. For that reason, mortgage companies need to verify and double check everything on the application, and to make sure you are a good risk.
There are three very good reasons that the loan process is much more onerous on today’s buyer than perhaps any time in history.
The friends and family who bought homes ten or twenty ago experienced a simpler mortgage application process. If you got a loan ten to 20-years ago, yes, it was easier. But at the same time, if you never experienced that in the past, your fame of reference is that it really isn’t all that difficult today.
Instead of complaining about the paperwork required, be thankful that that you can get a loan, and get it at these amazingly low mortgage interest rates.
Minneapolis / St Paul, MN: These days, everyone seems to know their “credit score”. Many people subscribe to one or all 3 credit services, or get a score from a place like CreditKarma.com.
Before you get too excited about that credit score, understand that the score numbers you just received most likely was based on the “Advantage Score” model. While that IS a credit score, that is NOT the same scoring model mortgage companies use.
Mortgage lenders care about how you handle mortgages, credit card companies care about how you handle credit cards. The reports these industries pull tend to be weighted towards their industry. The Advantage score you get when you look at your score, or from your credit card statement simply is NOT the same scoring model lenders use.
Another way to look at is is think about buying a car. You tell someone you bought a new Ford. Great, but what model Ford? Did you get a Ford Focus, or was in a new Ford Truck?
Getting your credit score somewhere?? Great, what scoring model is is based on? They are generally all FICO scores, but what scoring model is it based on?? Advantage score, Beacon Score? Typically the Advantage Score is noticeably higher than your mortgage score.
If the credit score you are looking at is from a mortgage company, then that should be accurate if any other mortgage company pulls your credit… Or at least until something changes, and credit scores can potentially change everyday. I’ll save that for another article…
Ultimately, the ONLY credit score that matters is the credit score your Loan Officer obtains on the day you start your mortgage application!
For most people, the score you see and get on your own, or through your credit card statement are close, and give you a ballpark idea of your lender score, but don’t be surprised when we tell you a different number.
Minneapolis, MN: Fannie Mae and Freddie Mac have recently announced they are bringing back 3% down payment options.
FHA used to be the low down payment champion, but changes to the program made after the housing market meltdown have really taken a lot of steam out of the program. The two biggest changes being the huge increase in the cost of FHA mortgage insurance, and that with a small down payment, the homeowner would have FHA mortgage insurance for the life of the loan!
If you have good credit, and could come up with a little more down payment, a conforming conventional loan would be much better.
There are many differences between the two programs.
FHA loans are more liberal in terms of lower credit scores, and weaker borrower profiles. It also has a shorter waiting period after major negative events, like a foreclosure or bankruptcy. FHA interest rates are pretty much the same for everyone. But you pay for this with the high cost of mortgage insurance.
Conventional loans are almost always better if you have good credit scores, but can be nearly as costly for those with weaker credit. Conventional mortgage interest rates and mortgage insurance costs both climb significantly as your credit scores go down.
Understand, Fannie Mae and Freddie Mac DO NOT DO LOANS. They buy loans from lenders after the fact. Therefore lenders can, and very often do, add additional rules and restrictions to the guidelines of what Fannie and Freddie say they will buy. Always check with your mortgage lender for your specific qualifications:
Federal Housing Administration (FHA) Announces 2015 Maximum Loan Limits
FHA’s Office of Single Family Housing published Mortgagee Letter 2014-25, which provides FHA’s single family housing loan limits for Title II Forward Mortgages and Home Equity Conversion Mortgages (HECMs), and provides loan limit instructions for streamline refinance transactions without an appraisal.
The loan limits published in this Mortgagee Letter are effective for case numbers assigned on or after January 1, 2015, and remain in effect through December 31, 2015.
The maximum FHA loan limit “ceiling” for most areas remains at the 2014 level of $625,500 for a one-unit property. The minimum FHA loan limit “floor” for all areas remains at the 2014 level of $271,050 for a one-unit property.
There are no jurisdictions with a decrease in loan limits from the 2014 levels. To enable Mortgagees to easily identify areas with loan limit increases, FHA has published a separate list of counties with loan limit increases.
Refer to Mortgagee Letter 2014-25 for complete loan limit information.
Mortgage rates in MN, WI, and SD have dropped recently to their lowest level in sometime. Mortgage company telephones, which had been fairly quiet the past few months are ringing like crazy as homeowner call to check mortgage rates, and decide should I refi or not?
If rates have dropped since you last financed your home, you may want to consider refinancing. Other common reasons to refinance include paying off a balloon payment, converting an adjustable rate loan to a fixed rate loan, or to take cash out. A few reasons for cashing out include: home improvement, an education fund, and consolidating debt.
Just imagine what you could do with an extra $100, $300 or more each and every month.
You might decide to apply the savings toward your balance and build equity faster. Or maybe you just might want to put the money in your savings account or portfolio and watch it GROW! The best thing is – you’re in control . You decide what is best for your family!
Many homes can take double advantage of today’s interest rates. Obviously the lower mortgage rate, but many homes have also seen a significant increase in value. You may now have a loan-to-value lower than 80%, which means you can also drop your mortgage insurance, increasing the refinance savings even more!
In order to refinance your existing home, or to simply help you decide if refinancing makes sense, just call or click. A quick application tells us what we need to know, and let’s us “run the numbers”.
A standard refinance will require an application, appraisal, and a verification of your income and assets, as well as most of the same paperwork required when you originally financed your home. Adequate property insurance and new title insurance is necessary.
A streamline refinance is available for many home owners. As the name implies, the process is streamlined, and generally does NOT require an appraisal. Available for both existing FHA Loans, and VA loans.
A HARP refinance is for existing Fannie Mae or Freddie Mac loans, that were closed prior to June 1, 2009. Usually no appraisal is required, and you could have lost some value, or even be significantly underwater on your existing loan and still be able to refinance.
To Refinance You’ll Need:
U.S. homeowners gained or regained more than $1 trillion in equity over the year that ended on June 30, 2014. Less homes underwater according to Core-Logic’s 2nd quarter 2014 analysis, 44 million homes in the country now have positive equity, a gain of 950,000 homes during the quarter.
The number homes which are still “upside-down” or “underwater,” that is the owner owes more on the mortgage than the market value of the home, is now 5.3 million or 10 percent of all homes with a mortgage. In Minnesota, just 7.8% of homes, and Wisconsin 10.9%.
In the preceding quarter (Q1) there was a negative equity share of 12.7 percent or 6.3 million homes and in the second quarter of 2013 there were 7.2 million homes or 14.9 percent that were underwater. This is a year-over-year decline of 1,962,435 or 4.2 percent.
Regaining equity is very important, as it allows many more people to list and sell their existing homes, moving up (or down) to something else, and others to refinance and save on their current homes loans – especially those who want to refinance, but did not qualify for programs like a HARP Refinance.
Here is a basic list of some of the worst mortgage lender choices, and why:
Your bank is generally a poor choice because they understand that you believe simply because you’ve had a checking account there for years, that they will treat you better and give you a good deal. The reality is just the opposite. Because they know you are already comfortable with them, you are not likely to shop for a mortgage loan elsewhere. The reality is this means they know they can get away being higher priced. They also have higher expenses, like advertising and all the buildings they own, so their margins need to be higher.
Just because you’ve seen them on TV or hear their radio advertising a million times saying how Quick In Loans they are, does not make them a good choice. Actually what makes them a bad choice is because of their advertising. You see, all lenders get their money from the same source on the same day at the same time. All lenders have essentially the exact same closing costs, and all lenders are basically going to underwrite to the same guidelines. If they spend millions of dollars everyday advertising, and I don’t, who needs to have a higher profit margin?
Real estate companies over the past 15-years or so have all started adding their own mortgage divisions, and have their real estate agents aggressively push you to use their affiliated companies (mortgage and title). They use convenience (they are across the hall), or fear (other lenders won’t close on time) to get you to use their internal mortgage company. Rarely is the real estate agents internal mortgage company the best deal, because again, they know you are now less likely to shop.
It is completely OK for your real estate agent to suggest a mortgage Loan Officer to you. But if they are suggesting their own company, be very suspicious of their motivation for doing so. If they are suggesting an out side mortgage company, it is usually because they know, through experience that this Loan officer does a great job, has low costs, and great interest rates.
Minneapolis, MN: Freddie Mac today released the results of its Primary Mortgage Market Survey(R) (PMMS®), showing average fixed mortgage rates moving down slightly to remain near historic lows for the week ending July 17, 2014.
Mortgage Rate Averages
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.
“Mortgage rates were little changed amid a week of light economic reports. Of the few releases, industrial production rose by 0.2 percent in June, below the market consensus forecast. Also, the producer price index for final demand rose 0.4 percent in June, rebounding from a 0.2 percent decline the prior month.”
Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher. Follow this link to view today’s best MN, WI, and SD mortgage interest rates.
When you are looking to purchase a home, or refinance your exiting home, your credit score is very important. One of the first things your lender will do is check your credit report to assess your creditworthiness.
As everyone knows, the better your credit score, the more options you have, and the lower the mortgage interest rates will be available to you.
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 more in higher payments over the years, and worse yet, cause you to be denied.
Improving your credit score before getting a mortgage loan will ensure that you get the best interest rate possible.
Here are a few tips that can help you improve your credit score:
A good analogy for improving credit is a little bit like losing weight. You might see a big jump right away, then getting to your full goal may take awhile. But the long term benefit of your new good habits that will make all the difference in the future
When it comes to all of the ways to improve your credit score, there can sometimes be something you can do quickly, and other take a long time. Just like weight loss, there are no magic quick-fixes. The best way to rebuild your credit is to be responsible over time.
Your first step is to review your credit report. Your loan officer is a good place to start, or you can get a copy from www.CreditKarma.com or www.AnnualCreditReport.com. Check it over carefully for errors, and contact the original creditor to correct those errors.
Credit cards cause a lot of score damage. This is primarily because the scoring model looks at your credit limit, and then how much you have currently on the card. Think of it in terms of 1/4 percent. If you have less than 25% of the limit used, this is considered good utilization of credit. If you are over 75%, or worse yet, max’ed out, you are killing your credit score.
Late payments spread all over your report can be one of the biggest negative factors bringing down your score. If you have issues paying in a timely manor, simply set up automatic payments, and set up alerts on your accounts to be notified by email or a text whenever your payments are due.
Needless to say, these items serious hurt your credit score. The most important thing to do to restore your credit is to get or maintain current and active credit. You see, the scoring model will see the old nasty negative items. But they want to see how you are TODAY. Have you gotten back on track? If you don’t have current credit, your score will never recover.
Mortgage rates kept moving lower today as European markets continued to provide an unexpectedly large boost in demand for domestic bond markets. Those markets include mortgage-backed-securities that most directly affect mortgage rates, and higher demand pushes prices higher, which in turn makes mortgage rates rates lower.
The most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) is now centered on 4.125%. Some borrowers will see the improvements in the form of lower closing costs or higher lender credits.
Getting a mortgage loan? Here are some fancy buzz words and popular phases that you should be aware of:
First, understand that all lenders are essentially the same when it comes to programs, interest rates, and closing costs. If we advertised “USE ME – I AM THE SAME AS EVERYONE ELSE”, it would be pretty hard to get anyone to call. So the lender game is to use creative buzz words, and creative quoting games to make themselves “appear” better than everyone else, and get you to call:
1) NO Closing Costs: All lenders have costs to close a mortgage loan, and most of the costs are from third parties like appraisers, title company, credit reports and state taxes. The ONLY way for a lender to reduce or claim no closing costs is they simply INCREASE your interest rate to offset your costs. No Lender Fee, No Origination also apply here.
2) FREE Quote: I don’t know a single lender that charges to quote someone, so this isn’t anything special.
3) QUICK Closings: There is no such thing anymore. New mortgage disclosure rules mandate minimum numbers of days after disclosure before closing a loan (so you can think about it). Furthermore all the new rules also seriously slow down the process of getting appraisal, verifying your information with the IRS, and making you prove just about everything has turn a fast loan closing into at least 30-days.
4) In House Underwriting: Pretty much all lenders have their own underwriting teams, and pretty much all brokers do not.
5) Competitive Rates: Simply “competitive”? Not the lowest, not the cheapest… but, competitive? Why don’t they show you the rates?
It isn’t a trick to pay off your mortgage in half the time, it is not some scam, it is actually really simple. Most homeowner don’t think they can do this, but the reality is, most actually can pull it off if you simply put your mind to it.
How? Dump your 30-year mortgage for a 15-year mortgage. By switching to a 15-year mortgage, the average person will pay somewhere around 64% less over a 30-year loan.
Financially savvy homeowners are capitalizing on the savings they can reap by refinancing to a shorter loan term. Last quarter, nearly 40% of U.S. homeowners refinanced out of an existing 30-year fixed rate mortgage and into a shorter 15 or 20-year loan term.
With 15-year mortgages being near their cheapest levels in history, refinancing to a 15-year term is a very smart decision. Prior to 2012, 15-year mortgage rates were 0.52 percentage points lower than a 30-year loan. However, in last year’s fourth quarter they were averaging about 0.97 percentage points lower that a 30-year loan.
According to Freddie Mac, current 15-year loans require just $28,000 of mortgage interest per $100,000 borrowed. A 30-year mortgage costs $81,000 per $100,000 borrowed. Never in history have savings of this capacity been possible!!
Of course a shorter term loan is going to cost you more money per month today. But generally speaking, many people never ask, and don’t even know what the 15-year mortgage payment would be.
– A 30-yr fixed at 4.625% would run $771.21 a month and interest of $131,539 over the life of the loan.
– A 15-yr fixed at 3.375% would run $1,063.14 a month and interest of $45,191 over the life of the loan
Minneapolis, MN: I hear this question on a fairly regular basis, and the plain and simple answer is NO.
You DO NOT need to reaffirm a mortgage loan that was in a bankruptcy to refinance that loan today. Anyone telling you otherwise is 1000% wrong.
If you did not reaffirm your mortgage during your bankruptcy, the mortgage did not disappear. It is still a lien on your house. It is still owed and must be paid unless you are willing to risk losing the property. The mortgage company — the servicer — virtually always wants you to make these payments. And they often don’t care about the reaffirmation and will not waste their time (and your money) asking for it during the bankruptcy case.
If you don’t pay, you will be foreclosed on and have to vacate the house. The bankruptcy will protect you from ever having to pay any loses ON THAT LOAN. But if you sign and take out a new loan, it is a new debt, a new loan, and the previous bankruptcy protection from the old loan is gone.