Category

Home Buying

Oct 03
0

Can You Buy a House With Bad Credit?

By | Home Buying, Mortgage

Buying a house is a dream many people have, but it can seem out of reach when you have bad credit. While it’s certainly easier to qualify for a mortgage loan with a credit score of at least 620, it’s not impossible if your score is lower. You just have to prove to lenders that you’ll pay your mortgage on time every month for years, and having a good credit score is only one way to do this. If you’re hoping to become a homeowner without first having to spend years improving your score, take a look at some of your options.

Bad Credit Buy House

Bad Credit? Check Your Credit Report for Errors

Your first step is to get a copy of your credit report. You might be surprised by your score, as it could be higher or lower than you assumed. Be sure to look over the entire credit report, because you might find an error, such as a bill in collections that you actually paid. If you do find an error, report it right away to the creditor so you can get it removed from your credit report before you get a mortgage.

If your score is low and you are getting ready to look at houses, you have a chance of improving your bad credit at least a little in the next few months. Start by making every payment on time, and then pay down any credit cards that have high balances. If you have a late payment on your credit report, try contacting your creditor to see if you can get it removed, as this is a possibility if you’re a loyal customer and are not normally late.

Similarly, if you have collections on your report, ask the creditor if you can pay the amount past due in exchange for the collections being removed from your credit report. In some cases, even boosting your score by as little as 10 or 20 points can make a difference, since it might take your score from poor to fair.

Make a Big Down Payment

If your credit score still falls into the bad or poor category when you’re ready to buy a house, rest assured you can likely still get a mortgage loan. You just might have to pay more upfront. Making a big down payment can help you get a loan, because it reduces the amount of money you need to borrow. This makes it more likely that you’ll be approved.

In addition, if you put down 20 percent or more, you should be able to avoid private mortgage insurance (PMI), as you typically have to pay this monthly if you put down less than 20 percent. And of course, the more money you put down on the house now, the less you’ll end up paying in interest over time. So there are benefits to saving up a good down payment, regardless of what your credit score is.

Look for a Loan That Doesn’t Require Good Credit

Typically, mortgage loans require you to have a credit score of about 620 or more, which is why buying a house when you have a lower score can be challenging. However, it’s not impossible, in part because there are loans that don’t require a score of 620 and up. They don’t require a large down payment, either.

FHA loans are a good example of this type of loan. This loan is backed by the Federal Housing Administration, which makes lenders more willing to offer money to borrowers with bad credit, as the loan will be repaid either way. With an FHA loan, your credit score can be as low as about 580. You just have to have a down payment of 3.5 percent, which is still much lower than the typically recommended 20 percent. This is why FHA loans are usually appealing to homebuyers who have bad credit.

Show Lenders Why You Should Get a Mortgage Loan

Typically, lenders use computer systems with algorithms to determine which homebuyers are eligible for mortgage loans. This is why it’s easier to get a mortgage loan when your credit score is high. However, it’s not all about the algorithm. Many lenders are willing to overlook low credit scores if you have something else to offer as a borrower.

For example, if you have a great rental payment history, let your lender know, since this shows you’re likely to make your mortgage payments on time. And if you have a lot of money in savings, such as enough to pay your bills for about six months, show proof of this to your lender. This suggests that even if you lose your job or suffer other financial setbacks, you’ll still be able to pay your mortgage, and that’s what’s most important to lenders considering letting you borrow money for a house.

As you can see, you definitely have options when it comes to buying a house with bad credit. But if you’re not in a rush to buy right now, it’s a good idea to spend some time and effort improving your credit score. You can even contact a credit repair company for help getting started. After all, the higher your score is, the more options you’ll have when it’s time to buy a house.

Source:

https://www.nolo.com/legal-encyclopedia/five-reasons-make-large-down-payment.html

https://www.credit.com/credit-repair/credit-repair-content/dispute-credit-report-error/

https://www.hud.gov/buying/loans

Jul 19
0

Buying A Home: 5 Reasons to Buy Now

By | Home Buying

Buying a home is a big step in anyone’s life. Whether you are considering your first home, moving to a new place, or changing up your residence, purchasing a new home can be stressful and expensive. Picking the right time to take the leap can be a challenge. After all, what if a better home comes available next week or something changes in your personal life? However, sometimes the climate is particularly well-suited to buying a home – and that time is now.

Read on for our top reasons why you shouldn’t wait to buy a home in 2017.

Buying a Home

1. Interest Rates are on the Rise

The first thing you need to know is that interest rates are rising. In June, the Federal Reserve announced its third short-term interest rate hike in six months. USA Today interviewed three economists after the increase. The each said that they expect interest rates to increase by another quarter-point before the end of the year – making for a full percentage point increase in 12 months. Right now, 30-year fixed mortgage interest rates are close to a seven-month low – buoyed by weaker central banks abroad – but the low prices will not hold. “Fixed-rate mortgage rates are likely to gradually edge higher over the next six to 12 months,” explains CoreLogic chief economist Frank Nothaft, “Rates are likely to rise to 4.25 percent to 4.50 percent by the end of 2017” – and that is only the beginning. Chief economist for the Mortgage Bankers Association, Mike Fratantoni, is estimating that 30-year rates will be over 5 percent before the end of 2018.

Nothaft put the mortgage rate increases into perspective: “For example, with fixed-rate loan rates up by 0.5 [percentage point] since last summer, and house prices in national indexes up at least 5 percnet, the monthly principal and interest payment is more than 10 percent higher than it was last summer, adding to affordability challenges for first-time buyers.”

2. The Federal Reserve Takes Action

But wait. There’s more. The Federal Reserve is not only increasing interest rates. It is also divesting many of its mortgage-backed securities. “During the financial crisis, the Fed lowered short-term rates to zero. In an effort to further stimulate the economy by lowering long-term interest rates, such as mortgage rates, it began buying mortgage-backed securities. Higher demand raises bond prices, resulting in lower yields,” writes USA Today. “The Fed now holds more than $1.7 trillion in mortgage-backed securities, about one-third of all those outstanding.”

By selling off some of its portfolio, the Fed can get back to business as usual. This might streamline things for the Federal Reserve but it could spell trouble for home buyers. When the Fed adjusts its balance sheet like this, it puts pressure on mortgage rates. This action could push interest rates higher even if the Fed makes only minimal hikes going forward.

3. Home Inventories are Shrinking

There is also an issue with regard to home inventories. As of November 2016, there were almost 1.9 million homes for sale (1.85 to be exact). It might sound like a lot but that is almost 10 percent fewer homes than the year before. Moreover, the decrease in home inventories is not a blip. The number of homes for sale in the United States has been on a steady decline since the housing bubble burst so many years ago – and it looks as though the decrease will continue.

“Real estate experts predict that inventory will continue to shrink, at least for the foreseeable future. That means that in most areas of the country, buyers have more homes to choose from today than they will next year. Or even next month” says Realtor. “Bottom line: Every day you wait to start looking for a new home, you face stiffer competition for fewer homes.”

4. Home Prices are Increasing

This leads to the next issue – home prices are on the rise. “We are at a very, very unusual and historic time again… if you recall, we were in a historic time when prices were falling and rates were falling and we had a lot of inventory, and so buyers sort of had their pick of the litter, right?” says Chicago Association of Realtors president Matt Silver. “Now it’s the exact opposite.” With more competition for homes, it becomes a seller’s market. While it’s impossible to predict just how high home prices will go, Charles Nathanson of Kellogg School of Management says that when prices start to rise in a given year, they usually continue to rise the next year by an average of 70 percent or so of the amount they rose in the previous year.

5. Missed Opportunities

It costs money to buy a home. In addition to your new mortgage payment, you have closing costs, home insurance, maintenance and real estate taxes to consider – and that’s after the down payment – but the cost of postponing buying a home can be even steeper. Realtor economist Jonathan Smoke says that waiting just one year will cost you almost $19,000 between rising mortgage rates and increase in home prices. Over three years, that benefit is just under $55,000. Now, put this cost over 30 years and compound it and the financial benefit of buying a home today is over $217,000.

With the Federal Reserve’s current agenda, shrinking home inventories, and rising real estate prices, there is a huge cost of missed opportunities when you postpone buying a home. So, what are you waiting on? Ovation Credit Services can help make sure your credit report is mortgage ready. Contact us today for a free consultation.

Sources

Bundrick, Hal, “What the Latest Fed Rate Hike Means for Mortgage Rates,” USA Today, June 14, 2017. [Accessed: https://www.usatoday.com/story/money/personalfinance/2017/06/14/nerdwallet-mortgage-rates-fed-rate-hike-home-buyers-sellers/397475001/]

Gordon, Lisa, “3 Crucial Reasons You Should Buy a Home Before 2017 Ends,” Realtor, January 23, 2017. [Accessed: http://www.realtor.com/advice/buy/reasons-buy-a-home-2017/]

McGuire, Nneka, “Should You Buy a Home in 2017? Here’s What 3 Experts Say,” Chicago Tribune, May 24, 2017. [Accessed: http://www.chicagotribune.com/classified/realestate/ct-re-0528-experts-say-buy-now-20170525-story.html]

Stults, Rachel, “$217,726: That’s What You’ll Save (Give or Take) If You Buy a Home Now,” Realtor, May 28, 2015. [Accessed: http://www.realtor.com/news/trends/financial-benefit-buying-a-home-now/]

Aug 22
2

How Credit Scores Impact Mortgage Loans

By | Credit Repair, Credit Scores, Home Buying, Loan, Mortgage, Your Credit

Credit Scores Impact Mortgage Loans

Are you working towards financing a home? You probably know how your credit rating will impact your loan qualification. You pretty much need the minimum credit rating for FHA home loans, which is a 580 FICO score. If you cannot qualify for FHA insurance, you will be hard-pressed to find any lender until you fix your credit.

There are many implications that your credit rating can have on your prospective home loan, such as whether you actually qualify for the mortgage, how low of an interest rate you will get and what type of lender will work with you.
Now, there’s also an unspoken factor: how much your mortgage will cost in total.

How Your Mortgage Could Cost More

When you apply for home financing with a bad credit score, it is unlikely that a major bank will approve you. Since it is the major banks that get the best borrowing rates in the first place, your alternatives will be more costly. In the worst case scenario, only a private lender would consider you.

You might be somewhere in the middle and can get a home loan through a financial institution that accommodates bad credit borrowers. There are many reputable lenders in this area, but you still face the issue of a higher interest rate. This is because the banks know you are a higher risk.

Tip: Get your mortgage through a highly legitimate financial institute that works with bad credit borrowers while also offering traditional home loans. That way, you can repair your credit while holding the costlier loan and refinance under the same lender after your credit score improves.

Your credit score does not have to hold you back from a mortgage. You just need to make sure it’s not unexpectedly costing you extra.

What Will Your Credit Score Cost You?

When applying for a home loan, your decided interest rate is mainly calculated based on your credit score. So if you were to apply for a mortgage right now, what would this mean to you?

It all depends on where you live …

Let’s use Manhattan, New York as an example, seeing as how even a one-bedroom will easily set you back $400,000 or more.

Say you are buying an apartment for $400,000 and you give the minimum of 10 percent down. This leaves you with a $360,000 principal to finance through a mortgage provider. Let’s say the mortgage will run for 30 years and it’s a fixed-rate loan.

Below shows your total interest cost for the lifetime of the mortgage. These calculations come from MyFICO.com’s Loan Savings Calculator, which estimates your interest rate based on your FICO score range.

  • 620 to 639 FICO score: $319,418 total interest (4.793% APR)
  • 640 to 659 FICO score: $277,706 total interest (4.252% APR)
  • 660 to 679 FICO score: $245,727 total interest (3.825% APR)
  • 680 to 699 FICO score: $230,167 total interest (3.613% APR)
  • 700 to 759 FICO score: $217,414 total interest (3.437% APR)
  • 760 to 850 FICO score: $201,683 total interest (3.217% APR)

To put it into context, you are looking at saving $117,735 over 30 years by financing with perfect credit instead of below-average credit. From another perspective: your monthly payment will be about $327 less!

How to Make Your Mortgage Cost Less

There are some tricks that can help you qualify for a more affordable mortgage. Four simple ways to do this include:

1. Refinance Your Mortgage After You Buy

Your mortgage payments go through on time for half a decade, and suddenly the huge debt does not keep your credit score suppressed. The result could be seeing your credit rating go up by a considerable amount since when you first qualified for the mortgage. If this is the case, you could refinance the mortgage to lower your interest rate and ultimately make the rest of the mortgage term cheaper for you.

2. Rent-to-Own the Place First

If you are repairing your credit, but you want your new home now, you could try to buy through a rent-to-own agreement. You will be able to guarantee the seller gets the asking price as long as you follow through with financing at the end of the term. While the rent-to-own contract will set you back a little in equity, the much lower interest rate will create much more savings.

3. Wait a Little Before Buying

While this is not the most exciting solution, sometimes it makes a lot of sense. Say you have a bad debt in collections from six years ago. If that’s the case, waiting roughly a year will cause the negative item to leave your credit report and thus it will not hold back your FICO score. The end result could be a huge boost in your credit rating, or at least enough to score you a better interest rate.

4. Purchase Under Owner Financing

If you want your new home now, but rent-to-own will not work, you might be able to purchase via owner financing. This means the seller holds the mortgage for you for so long (usually 1 to 3 years), and then you can get your mortgage and make a balloon payment to buy it out. You can use the in-between time to repair your credit and this will help you secure a good interest rate. In the meantime, you will be paying on the home under the current mortgage conditions and your bad credit status will not cost you more.

Owner financing is really the only cost-effective and sound way to approach buying a home with bad credit. Otherwise, you could be throwing well over $100,000 out the window. That’s a lot of extra money to pay, especially if you are actually eyeing a one-bedroom apartment.

To conclude, get your credit repaired before applying for a mortgage because the cost of doing so is minuscule in comparison to what you will save on interest payments.

Sources:

  • http://www.fha.com/fha_credit_requirements
  • http://www.myfico.com/crediteducation/calculators/loanrates.aspx
  • http://www.investopedia.com/articles/mortgages-real-estate/10/should-you-use-seller-financing.asp
May 24
0

Home Equity Loans and Your Credit

By | Credit Repair, Credit Reports, Credit Scores, Home Buying, Homeowner, Mortgage, Personal Finance, Uncategorized

Home equity loans, as the name suggests, are a way for homeowners to borrow against the equity that they built up in their home. For a number of years following the 2008 financial crisis, lenders were reluctant to offer home equity loans because the value of so many homes had decreased. This lowered the equity that people had built, so it was difficult for many Americans to take advantage of them.

The good news is that as the housing market has stabilized, fewer people are at risk of defaulting on their mortgage, and home values are on the rise. In fact, the home equity market has improved for its third straight year, and, according to USA Today, the number of loans increased by about 20 percent in 2015. Consequently, lenders are more willing to extend home equity loans to customers who qualify.

The key word is “qualify.”Owning a home and having some equity doesn’t mean you automatically qualify for a home equity loan. Lenders want to be sure that you’ll be able to repay your loan. Your credit score and credit history are key indicators. So lenders won’t just look at the amount of equity that you have in your home, they’ll review your credit score and your payment history on other lines of credit, such as credit cards and your existing mortgage.

Credit Scores

While a potential home equity borrower may be current on all of his loans, he may still have a credit score that is too low for him to qualify for a home equity loan. Enlisting the help of a credit repair service such as Ovation Credit Service is a great way to improve your credit score. Our services work with credit bureaus and creditors to resolve issues that may be hurting your credit score.

A key service of credit repair services is educating you about factors that are impacting your credit score and keeping it lower than it could be. Not everyone understands how things like credit utilization and the number of open lines of credit can affect credit scores. Having an expert on your side to help navigate your credit report can help improve your score and show you which behaviors are likely to have the greatest impact on your score.

Types of Home Equity Loans

There are a lot of home equity lenders. You can go to your local bank, where you already have a relationship, or shop online for the most competitive rates. There are two main types of home equity loans:

  • Traditional Home Equity Loans are a lump sum amount paid to you when you’re approved. These are best for repaying credit card debt, consolidating other loans, paying for your kids’ college tuition, or splurging on a big-ticket purchase such as a car. The funds are given to you, and you make payments based on how much you borrowed.
  • Home Equity Lines of Credit (HELOC) are a great way to borrow against the equity in your home and keep some funds in reserve. If you’re renovating a room in your house or want to take a nice vacation, you can tap into some of the equity available to you. You only pay back the amount of equity from the line that you used, but you have other funds available if you decide to expand the scope of your renovation project or extend your vacation.

Things to Consider

A traditional home equity loan is a great tool for borrowers who want to improve their credit score. Having some cash available to consolidate high-interest credit cards—or pay them off entirely—is a good way to manage your credit. A credit repair service can recommend which lines of credit you should pay off first to have the greatest impact on improving your credit score.

Oct 07
0

Include Your Credit Score in Your New Home Purchasing Checklist

By | Credit Scores, Home Buying

Investing in a new home is a huge commitment, and as you prepare to make that commitment, it’s important to make sure your dollars are working as hard as possible for you. This is why it’s wise to create a home purchasing checklist that covers a number of financial factors, including your credit score. In addition, if your credit score is low, you will want to invest some time in credit repair so that your financial strength will be at its peak when you’re ready to take that big step of committing to a mortgage. Here are eight items that should be on your home purchasing checklist:

  1. Define the house of your dreams. Your home is something that you and your family will use every single day, so it’s important that it meets your needs. Make a list that includes everything you need in a house, and don’t forget to include the neighborhood and schools on that list. Then take a look at how much that house of your dreams would cost.
  2. Create your budget. Is this house of your dreams within reach? An important first step in determining the answer is to create a budget, based on what you’re already paying every month, what kind of down payment you can afford, and what your potential mortgage payments would be. If you can afford it, set your budget for a little less than your maximum preapproval amount, so you have some flexibility to make improvements or take a vacation now and then.
  3. Contribute to your savings. The higher a down payment you can make, the better a mortgage you’re going to be able to negotiate, and the lower your monthly mortgage payments will be. It’s never too early to start giving your savings a boost.
  4. Check your credit score. Your credit score can make a big difference in your interest rate, so it’s important to bring that score up as much as possible. Get a free copy of your credit score from one, or all, of the credit bureaus (Equifax, TransUnion and Experian), and make sure there are no errors. If you find that something needs correcting, speak with the creditor and request that it contact the credit bureau with the correction.
  5. Curb your credit card spending. In the months leading up to your big purchase, you will want to dial back on your credit card spending and pay off as much of that debt as you can. This will not only raise your credit score, but also help you learn to live on less, which will help make those mortgage payments easier.
  6. Figure out your monthly payments. If a lot of your monthly payments are going toward debt, it’s going to be harder to get a good mortgage offer. Lowering your monthly payments will make you look more attractive to loan officers. You can use a lower-cost balance-transfer credit card to help.
  7. Get a preapproval letter. When you’ve taken care of raising your credit score, bumping up your savings and curbing your spending, getting a mortgage preapproval letter will show that you’re serious about that dream home. The letter will also help when it comes to negotiating a good price for the home.
  8. Revisit your dreams—if necessary. If you find you’ve done all of the above but still can’t make the math work to buy your dream home, take another look at your desires and see if you can’t make some compromises. That way you can still buy a home that will work for you and your family.

If you get to No. 8 and find you have to revisit your dreams, you also have the choice of asking for some help with credit repair. If your credit score is holding you back, or forcing some changes to your dream home, contact Ovation today and let us help raise that score so you can afford the house you’ve always wanted.

Sep 04
0

How Home Buyers Can Use Their Credit Score (and More) to Reduce Their Monthly Mortgage Payment

By | Credit Repair, Home Buying, Homeowner

lower-mortgage-with-credit-scoreSo you’re looking to purchase a home, but cash flow is an issue, and you want to make sure that your monthly mortgage payment is as low as possible. Here are eight great strategies for shrinking your prospective monthly mortgage payment as you prepare to purchase your home.

Make a large down payment. The more cash you can put down at closing time, the less you will have to borrow. This decreases not only your mortgage principal, but also the amount of interest you’ll be paying. Higher down payments can also get you better interest rates.

Make a large enough down payment to avoid private mortgage insurance, or PMI. PMI is third-party insurance that most lenders will insist you get if you put down less than a 20 percent down payment. It’s their way of making sure they’ll get enough money back if you default on the loan. If you can’t put down at least 20 percent, then shop around for a loan at one of those few banks or credit unions that doesn’t require PMI. If you have no choice but to pay for it, remember to cancel your PMI (or refinance your entire loan) once the equity in your home reaches 20 percent.

Shop for a good deal on mortgage lenders and insurance the same way you would for any other item. Every lender and insurance company works differently, which means that each company will likely come up with a different package for you. Taking the time to shop your loan to at least three or four lenders and insurance companies will make sure that you’re getting the best packages possible — and don’t forget to bundle your auto and home insurance to get a further discount.

Check each town’s real estate tax rates. Most likely you’ll be looking for a home in an area with a few different towns or suburbs. The same way that you want to shop for towns with good schools, check out their real estate tax rates as well. A home bought in an area with lower real estate taxes can save you significantly on your payments—for every year that you own the home, not just while you have a mortgage.

Consider points. Points are the fees that you have to pay when buying a house, and it’s possible to purchase points that will lower your interest rates. Take the time to do the math and figure out how long it would take you to break even—simply divide the cost of the points by the amount you save per month ($5,000 / $50, for example, would require 100 payments, or roughly 8.3 years, to break even)—and whether that aligns with how long you plan to own the home.

Talk terms. Long-term mortgages divide the payments over a longer period of time, so the monthly cost is less, but it will take you longer to pay off the mortgage. Short-term mortgages pay off the debt more quickly and accrue less interest, but the monthly bills are higher. Figure out which method works best for you.

Think smaller. When shopping for a new home, ask yourself whether you really need all that space, inside and out. If you can find a smaller home on a smaller plot of land, you’ll pay less.

Don’t forget to bump up your credit score.Credit scores are a major factor lenders look at when determining interest rates, with the better scores resulting in rates that are much more favorable. In fact, a good credit score can reduce one’s mortgage rate by as much as 1.5%, which would translate to a savings of roughly $190 per month for a $200,000 loan. Anything you can do to fix errors in your credit score or improve your payment performance will help improve your mortgage interest rate and lower your payments.

So when you start looking for a home, keep these handy tools in mind. They will help you find the lowest mortgage payments possible. And along the way, should you need any assistance with credit repair, Ovation is here to help.

Aug 21
0

Dos and Dont’s to Keep Your Pre-approved Mortgage Loan

By | Home Buying, Mortgage

pre-approved-mortgageAre you pre-approved for a mortgage and getting ready to purchase the home of your dreams? Before you get too excited, keep in mind that a fully approved loan can get denied for funding even after you have signed all the loan documents.

How does this happen? The answer is simple. Before funding, the underwriter pulls a new credit report, and any new findings can be used as justification to kill the loan. This isn’t likely to occur if the timeframe is within 30 days, but you can expect a new credit report to be pulled if the date of the application is more than 60 days out from actual funding.

Losing a loan after approval is very common. To help prevent this from happening to you, follow these dos and don’ts.

Do continue making your mortgage or rent payments

The key element a lender is looking for is responsible payment patterns. Any change in these patterns can affect your credit, thereby affecting whether your approval on a new loan still stands. Even if you have given notice, continue paying rent or your current mortgage until you have signed final loan documents and your loan has been funded.

Do stay current on all accounts

The quickest way to lose funding on a loan is making a late payment. Be sure to stay up to date on all loan obligations.

Don’t make a major purchase

This is what troubles borrowers the most. A large purchase can run up your credit card balance, thus lowering your credit score. The best tip is to avoid that big purchase until after you have signed your final loan documents. This includes buying a car, boat, TV, or (especially) furniture.

Don’t open a new credit card or cell phone account

Opening a new account requires a credit inquiry, which can lower your credit score. If you’re on the border credit-wise, that additional inquiry could lower your score enough to impact a decision from your loan provider.

Don’t close any credit card accounts

Closing an account lowers the amount of credit you have available, which can lower your credit score since your credit-availability-to-use ratio accounts for 30 percent of your score.

Don’t consolidate your debt into one or two cards

Doing this lowers the amount of credit you have available, which, again, can impact your credit score.

Don’t take out a new loan

This includes any type of loan, such as a car or student loan, or new credit card. Any of these obligations can have a negative impact on your credit and will likely not reflect positively to underwriters and investors.

The key takeaway here is to wait until after your loan closes before making any major financial changes, such as obtaining a new loan, consolidating debt, or opening new accounts.

If you’re considering purchasing a home, the first step is to ensure a positive credit score. If you have a poor credit score, it isn’t too late and you might be a good candidate for credit repair solutions. Let us at Ovation help you. We offer a wide range of credit repair solutions, customized to meet your unique needs.

Contact us today to see how we can help.

Oct 29
0

Mortgage Post-Foreclosure: 3 Steps to New Ownership

By | Home Buying, Homeowner, Mortgage

It’s Saturday morning, and you’re watching your child playing on the playground next to your apartment building. Sure, it’s not the backyard you used to have behind the home you used to own, but there’s plenty now to feel upbeat about — because there’s money in the bank for the first time in a long while. It’s only a matter of time until you’re watching your child play in a yard from your own porch again.

One thing worries you though. Is your foreclosure going to keep that yard and porch out of your grasp?

Yes! You can get a mortgage after a foreclosure

It is possible to get a mortgage after a foreclosure, but it will take hard work on your part to repair your credit and establish yourself as a sterling example of financial responsibility. Depending on your circumstances, there may also be a mandated waiting period of one to seven years. However, there are several concrete steps to get you on your way and possibly lessen your wait.

First of all, get a handle on your financial reputation. Get your hands on every official record you can find, including your credit report, and make sure all the information about you—and the details of your foreclosure—is 100% accurate. Be vigilant. Sometimes debts that you thought had fallen off your credit report can be sold to new collection agencies and reopened. Contact anyone presenting inaccurate credit information, and have it corrected.

Yes, there are concrete methods to responsible credit repair

Here is where some hard, day-to-day work comes in. Your credit needs to be squeaky clean from here on out, but if that makes you want to hide and avoid using credit at all, think again. A mortgage broker will want to see that you’ve learned financial responsibility. So, it’s time to start building new credit. For regular use, apply for a secure credit card—and pay it on time! And while this may seem counter-intuitive, consider applying for a high-interest credit card—store cards are a good choice—and carry a balance no more than 30% of its limit. Of course, you’ll need to pay it on time and preferably in full every month.

Next is a big purchase. No, not the house yet. A car, a large appliance, something you could reasonably take out a loan for. Make sure it’s a loan you can manage, and here’s where you will really impress a mortgage broker: Be better than the terms of the loan. Overpayment, extra payments, early payments — be so good that Ebenezer Scrooge couldn’t find fault with you.

Yes, someone can help you

Of course, the best way to get started on repairing your credit and getting a new mortgage after a foreclosure is to speak to a credit repair professional like Ovation. Each of our knowledgeable representatives work with you personally to build a credit repair and credit re-establishment plan that is tailored just for you. Call us today for a free consultation.

Oct 15
0

Improve Your Credit for Cheaper Mortgage Rates

By | Credit Repair, Home Buying, Homeowner, Mortgage

According to Freddie Mac, long-term mortgage rates are significantly higher – more than a percentage point – than they were only three months ago.  A percentage point may not sound like a lot, but in the lending industry they are a big deal and make a marked difference in your ability to achieve less expensive loans.

Mortgage industry leaders are advising their customers to lock in current rates as soon as possible. This is a positive sign that the American economy is becoming stronger daily, and signals to consumers that now is a great time to re-finance their mortgages. But, consumers first need to ensure that they have secure credit.

A weak credit score should be repaired and strengthened to be eligible for these improved interest rates. You want to pay the least expensive mortgage rate possible—that’s obvious. But, is your credit score preventing you from taking advantage of this market uptick?

Actions That Improve Credit

Here’s what we would recommend:

  • Pay as much as you can toward your current credit card(s) debt
  • Pay down the card with the most debt first
  • Decrease the charge limits of your cards
  • Check for inaccuracies (incorrect late payments, outdated personal information)

Every credit situation is different; however, taking control and working to improve your overall financial health can help you obtain the best rates possible.

Get Help Securing a Better Mortgage

Unsure of how to fix your credit? Ovation Credit can help you repair your credit score so that you can take advantage of better mortgage rates.  To learn how, browse our website or call 1-866-639-3426 for a free consultation and you’ll soon be on your way to paying less for your home!

 

Jan 31
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Home Lending Scores Explained

By | Home Buying

Did you know that there’s more to getting approved for a home loan than just the standard credit score? In fact, most lenders take a variety of scoring information into account when determining your ability to qualify for a home loan. The more you understand about the process, the better prepared you can be to get the home of your dreams.

Standard Credit Scores
One of the most popular methods of determining approval for a home loan is your FICO score. Based on several benchmark factors, including credit history and access to credit as well as income, you are assigned a number score ranging from 300-850. Your credit score tells prospective lenders what your potential risk factor is and whether you pay your bills late or not at all. The higher the score, the better chances you have of obtaining the best home loan.

eFunds DebitBureau
The eFunds DebitBureau can also help you when working toward a home loan. By collecting important consumer data from the DebitBureau, the eFunds score consists of specific economic factors, such as reporting how often your credit is checked, how many previous closures or bounced checks you may have and how much debt you currently have. With eFunds, your debit history score takes into account 78 standard data combinations. Using this risk model, many applicants are approved when typical credit scores may indicate potential trouble.

VantageScore
When the three major credit companies join together, you get the VantageScore, which is based on a letter system similar to grades in an academic environment. With a score ranging from 501-990, your VantageScore is a combination of data retrieved from your collective credit scores that reflects the depth of credit in your profile. Again, payment history is decisive, as it reflects more than 30 percent of the VantageScore.

It is never too late to make changes to improve your credit and get the house of your dreams. Every year, you should get an updated copy of your credit report – it is free to do so – to make sure it is reflecting your financial habits in a productive way that helps you build your life as you go. With so many options out there, you are sure to find the right home loan!

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