2 min read

3 Ways to Improve Home Buying Power

By Chris on Dec 10, 2020 6:53:25 AM

If you or anyone you know is buying a house this summer, chances are you’ll be dealing with competing for offers and low inventory issues.  Here are three ways to avoid getting priced out of the house you want:



1 – Consider Your Overall Debt Strategy
For example, what would it look like if you used some of your down payment funds to pay off other debts instead of using those funds for a down payment?  This may open the door to getting you qualified for a larger mortgage so you can bid higher on the house. Plus, home loans often carry a lower after-tax interest cost than other debts that may not be tax-deductible. Please see a CPA for details on the tax-deductibility of mortgage debt in your situation.

2 – Consider an Adjustable Rate Mortgage (ARM)
Depending on bond market conditions, the interest rate (and monthly payment) on an adjustable-rate mortgage can often be lower than a fixed-rate mortgage.  If this is the case in your situation, you may be able to use an ARM to comfortably afford the home.  Keep in mind that many ARMs have interest rates and payments that are fixed for a period of 5 years or 7 years.  This means the only risk to you is that you keep the house for longer than the initial fixed period AND interest rates go up considerably after that timeframe.

3 – Consider the Use of Gift Funds
Gifts from friends and relatives can often be used for a down payment.  Gift funds could be very useful if you find yourself in a bidding war where you’ve maxed out your mortgage options and the only other option is to come to closing with more cash.

Contact me for further details and to explore your mortgage options!

 

Topics: Real Estate WeAreBrokers Mortgage Loans Credit Home Mortgage Alameda
2 min read

How Payment History Impacts Your Credit

By Chris on Nov 9, 2020 5:49:04 AM

Your timely payment history has a 35% impact on your credit score. Paying debt on time and in full has a positive impact. Late payments, judgments, charge-offs, collection accounts, and bankruptcies have a negative impact. If you have had any bankruptcies within the last 7 years, it will seriously affect your ability to borrow or establish new credit accounts.  If you have had any judgments within the last several years, it is very important that you pay off the judgment and get a "satisfaction of judgment" from the court. Any unsatisfied or recent judgments will make a bad dent in your credit scores and adversely affect your ability to borrow. Usually, judgments and liens must be paid prior to the closing.


Timely mortgage payments are weighted heavily by the scoring systems and are one of the most vital requirements that lenders look for when evaluating your credit history. Many times, a single late mortgage payment within the last 12 months can hold up your file or make a big difference in your interest rate and loan terms. Your payment history on other debts (car payments, credit cards, etc.) is also given a lot of weight.

The credit scoring systems evaluate how many late payments you have had and whether they were 30, 60 or 90 days late. The worst situation is if you are currently in default. Additionally, the systems look at whether the late payments were consecutive. If you only have one or two minor late payments on your report with no other derogatory marks, your score will not be terribly affected, but you will have a tough time getting over the critical 700 level.  Here are four practical steps that you can implement:

  • Make all your payments on time.
  • Past dues on any account will destroy your score - bring your delinquent accounts current immediately.
  • Pay your bills before they go to a collection agency.
  • Regularly check your credit report for accuracy and make sure that disputed bills are not negatively affecting your scores.

 

 

 

Let me know if you have any questions or if I can help in any way!

Topics: Mortgage Loans Credit

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