Posts Tagged ‘Interest rate’

CREDIT SCORES and MORTGAGES

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As most of us know our Credit Score (FICO) has a major influence on whether we can get a Mortgage at all. What’s not always understood is that it also has a huge impact on the interest rate we can get. Here’s a simple way of figuring out how big that impact can be for different scoring ranges: 

*    CREDIT SCORE BELOW 620:

A credit score of 620 or lower places you in the “sub-primeborrower category. If you are considered a sub-prime borrower, you will likely pay 3 percent more on a mortgage loan than someone with excellent credit and will likely pay double-digit interest rates on a home equity loan or a line of credit.

*    CREDIT SCORE OF 620 TO 674:

This credit score range is still considered below optimal. If your credit score falls in this range, you will likely pay 2 percent more than borrowers who boast excellent credit ratings.

*    CREDIT SCORE OF 675 TO 719:

If you find yourself in this credit score range, you should find it relatively easy to procure a good loan. You will typically pay up to half a percentage point more than a borrower who has excellent credit in regards to a loan.

*    CREDIT SCORE OF 720 AND ABOVE:

If you possess a credit score at or above 720, you have an excellent credit score. This means you will be able to acquire a lender’s most favorable rates and you are in the position to shop around thus finding the best loan for you in regards to term, interest rates and other factors.”

by the way….

Factors contributing to someone's credit score...

Factors contributing to someone’s credit score, for Credit score (United States). (Photo credit: Wikipedia)

 

If you are considering getting help with Credit Repair be aware that the vast majority of organizations claiming to do this are scammers and/or crooks.

I can personally recommend Ken Strey for a professional service. His contact info is below. 

Scorewell Inc. | 925-478-4732 | kenstrey@scorewellinc.com | http://www.scorewellinc.com

 

 

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FHA BONUS

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Interest Rates

Interest Rates (Photo credit: 401(K) 2013)

FHA loans with a 3.5% minimum down payment are often the only choice for 1st time buyers.
They get a lot of bad publicity from uninformed sources who compare them wrongly to conforming loans needing much higher down payments.

The reality is that the FHA loan is neither designed, nor sensible, for high down payment buyers.

However it does have one very powerful advantage over the traditional conforming loans; FHA LOANS ARE ASSUMABLE at the same interest rate as they started at.
In future years this may be a very valuable feature when selling the property.

First let’s understand that 1st time buyers in California typically sell that 1st house after approx 5 years.

Now let’s consider what level mortgage interest rates will be at that time, and compare with todays. We will assume a $400,000 FHA mortgage

CURRENT (historically low) 3.5% = $1,796/ month.

FUTURE (5 years)(20 year average) 6.0% =$2,398/month.

SAVING = $602/Month.
Now in 5 years time you are selling your home and have a smart buyer trying to decide which of 2 similar houses is the best deal might they well prefer the one where you can:
1. Buy and take over the existing mortgage which is $602/month cheaper for all time
OR
2. Go through all the hassle of getting a much more expensive mortgage for as long as you own it.
Assuming they sell after a typical 5 year period there is a difference of $36,120!!!.

MAYBE IT’s WORTH FINDING OUT WHICH IS THE BEST MORTGAGE FOR YOU, Not for the loan Agent who did not take the time to explain ALL your options, and the long term implications of each one.

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TIME TO BUY???

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Are you a potential 1st time buyer living in Californias Silicon Valley, and expect to live in your new home for at least 5 years/? YES YES YES.

0. Prices in our Valley have pretty much stabilized.

0 Interest rates are at all time lows.

0 There are multiple 1st Time Buyer programs from Cities, Countys, State, and Federal Governments. These can provide down payment assistance, and significantly reduce the cost of owning.

If your answer to my 1st question is negative then the answer is probably NO NO NO.

If you believe that prices are going to drop further and you plan to wait and buy at the bottom, please let me know how you will be able spot that bottom before it has already happened.

 

 

 

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