Michelle Hrin
Executive Broker/REALTOR
Realty Executives of Hickory
If you’re ready to buy a new home, you know that a good FICO score is critical to the process. Your FICO affects not just your ability to buy a new home, but the interest rate and fees you’ll pay for the new loan. Often, buyers are shocked to realize their credit score is not as high as they thought. Even borrowers who always pay their bills on time can be surprised by a lower FICO score when they apply for a loan. Fortunately, your lender can help with a rapid rescore process.
A rapid rescore is initiated by your lender to boost your FICO in days. Most lenders offer this service and will start by reviewing your credit report with you. Lenders use what’s known as the “middle score,” in determining risk. There are three credit bureaus – Transunion, Equifax, and Experian – and they each calculate your score a little differently. The middle score is used for most home loans as your FICO.
Your lender has a program which can estimate your rescore based on removing false reporting or lowering the balance on a credit card. Even paying off one card can raise your score by 20+ points, enough to make a huge difference in your mortgage interest rate. Once the steps are determined and taken, they then request the credit bureaus to verify the report. This takes a few days. Then the new score will be available to the lender to use for your loan.
If you are considering a new home loan, it’s important to know your credit score ahead of time, when you can still correct mistakes. But, if you are already in the process, your lender may be able to use the rapid rescore process to quickly increase your score and offer you a better loan.
Everyone is looking for ways to save money these days. With rampant inflation and soaring energy costs, everything is costing more than it was a year ago. The good news is that in most areas, home values rose along with everything else, and many homeowners have unrealized wealth sitting in their property.
While it may not be the right time to sell and take the appreciation gain, there is another way to capitalize on the increase in home values. Often home buyers put less than 20% down on a new home. In this case, these borrowers were required to have private mortgage insurance (PMI). PMI is not homeowner’s insurance, that covers fire, theft, and other damage to the property. PMI is insurance that protects the lender in the event that the borrower defaults on the loan.
On average, private mortgage insurance premiums range from about 0.25% to as much as 2.25% of the loan amount. The cost is dependent on two factors: the amount of the loan and the credit worthiness of the borrower. This additional fee is applied to the monthly payment.
Yet, with rising home values, many borrowers may now have passed the 80% threshold and can ask to remove the PMI. The process for removing PMI varies from lender to lender but most will require a formal appraisal before removing the cost. FHA and VA have their own rules as well. But in this economy, removing an unnecessary housing cost can save many homeowners hundreds of dollars each month.
Having good credit is essential for a number of aspects of your life, ranging from the interest rate on a car loan or credit card to background checks for employment. Poor credit can be incredibly expensive, costing you thousands of dollars in higher interest rates over the course of a home loan.
Fortunately, with proper care and attention paid to your finances, it is possible to maintain a good credit rating. Here are six factors that could damage your credit score:
1. Not paying your bills on time - Bills not paid within 30 days can be reported to the credit bureaus.
2. Utilizing all of your available credit on credit cards - It is important to not max out your credit cards without a plan to pay them off.
3. Not having a diverse mix of credit - Having different types of credit, such as car loans and revolving credit, could help improve your score.
4. Applying for too much credit - Multiple applications for credit cards in a short period of time can be a bad sign.
5. Not using credit at all - You must show that you can responsibly use and manage credit in order to maintain a good score.
6. Closing credit cards - Keeping long-term accounts open is important, as closing them removes the positive history from your report.
Good credit is especially essential when searching for a new home or home loan. Having a good credit score can make the difference between having your loan accepted and being declined. Poor credit is preventable if you pay attention to the above mentioned criteria, so be sure to stay on top of your finances to ensure success.
The real estate market is shifting. In some areas of the country, it has flipped to a strong buyer’s market. Sellers challenged by this change are looking for creative ways to attract buyers. In addition, buyers suddenly in the driver’s seat are asking for more concessions from sellers than ever before.
Seller concessions are a useful tool in real estate. Used correctly, it can benefit both buyer and seller. For example, concessions can be offered in lieu of seller repairs or upgrades, saving out of pocket cash in an uncertain market. Buyers can also benefit from “financing” some of their own out-of-pocket costs for specified fees and charges.However, there are limits to what the lender will accept for seller concessions and understanding this ahead of time can save time and frustration.
Here is a snapshot of the most common loan types and concessions possibly allowed (always check with your lender). Conventional (Fannie Mae/Freddie Mac): · 25% down payment – 9% concessions · 10-25% down payment – 6% concessions · <10% down payment – 3% concessions FHA : · 6% maximum concession VA: · 4% closing costs concession USDA: USDA allows the seller to pay all the closing costs and prepaid for the buyer with no percentage limit.
Other restrictions and considerations apply, so speak with your lender. Seller concessions are a great way to save cash on both sides. Used properly, it can be a great tool to put real estate transactions together in a challenging market.
A brand-new home! Who hasn’t dreamed of creating the perfect home from scratch and moving into a space that no one has ever lived in before. There’s something special about a fresh home, but remember, new doesn’t mean perfect. And it certainly does not mean that there won’t be imperfections, small or large, to contend with.
One of the most important things to understand up front is what does your warranty cover? A builder’s warranty covers typical defects and other problems, but the fine print outlines timelines, procedures, and limitations. A thorough reading prior to closing will clarify how to handle any issues that arise when you move in.
When you are ready to move in, your checklist will differ from a typical resale home. First, always have an independent home inspection, just as you would if you purchased a used home. Alert the builder immediately of anything that the inspection uncovers.
During the final walk-through, you will also want to make sure the home was completed correctly; are the light switches level, are the floors even, is the paint free from nicks and scratches? You are buying a new home and it should look new.
Buying a new home is exciting. The good news is that most issues are minor and can be quickly corrected by the builder or home warranty company when discovered. No need to panic when imperfections show up
