Showing posts from November, 2021

Credit Utilization Affects Your Score

Credit utilization reflects how much of your available credit is being used at a given time.   Lower credit utilization indicates that a borrower is not heavily relying on their credit and that they are using their credit responsibly. Is calculated by dividing your total credit card balances by your total limits.   The higher the percentage, the higher the risk which adversely affects the credit score according to most of the companies.   It is recommended that your credit utilization be under 30% to positively impact your credit score. If the available limit on a credit card is $12,000 and their normal monthly balance is around $3,000, they have a credit utilization of 25%.   If for whatever reason, the borrower's available limit was reduced to $6,000, and their long history of having a monthly balance of $3,000, the ratio, then, increases to 50% which will likely lower their credit score. For borrowers who use more than 30% of their available credit and regularly pay off th

Larger Payment, Shorter Term, Bigger Savings

Some people consider a house payment as basic as monthly utilities but with a plan and some discipline, you can be mortgage free. Consider a person borrowed $300,000 at 3% for 30 years, the principal and interest payment would be $1,264.81 and at the end of 12 years, the unpaid balance on the mortgage would be $210,900. If that same person had financed the home on a 15-year term at 2.5%, the payments would have been $2,000 but the unpaid balance at the end of 12 years would be $69,310.   The homeowner will have a larger equity but they have also had to make higher payments. 15-year mortgages usually have a lower interest rate than the 30-year loans and at the time this article was written, the difference in a 30-year loan was about 0.5%.   A 15-year loan gives the lender their money back in half the time.   If rates go up during the interim, they will be able to loan it at the higher rate sooner.   For that reason, they are usually willing to offer a slightly lower rate on the sh

Have you checked these lately?

Homeowners know the need to periodically check certain things around the home to ensure that things operate properly and efficiently.   If maintenance is required, it may be less expensive to take care of it early rather than waiting until it is not working at all. Checklists are helpful because it requires little effort to know what must be done.   They are usually concise and provide enough information to complete the task.   These items apply to most homeowners but in no way offer a comprehensive list. Vacuum dryer exhaust ... not only does it affect the efficiency of your dryer itself, the accumulation of lint along with the hot air can ignite and create a fire hazard. Replace HVAC filters 4 to 6 times a year ... This is one DIY project that almost everyone should feel confident in handling.   Locate the filter, make a note of the size, and keep replacements available.   Turn off the unit, open the door or housing, remove the dirty filter, and replace it with the

Uncle IRRRL wants to refinance your VA loan

You don't have to have an Uncle IRRRL but you must be a veteran with a current VA-backed home loan. IRRRL is an acronym for Interest Rate Reduction Refinance Loan. To refinance with this program, also called the VA Streamline, the loan must provide a net tangible benefit (NTB) which would be in the financial interest of the Veteran.   Obtaining a lower interest rate is usually the reason behind refinancing but there needs to be enough difference in the current and the new mortgage to justify the expenses incurred.   Significantly lower payments or a shorter term are examples of acceptable benefit. The Veteran must currently have a VA-backed home loan to refinance using this program.   The Veteran does not have to currently live in the home as long as it can be certified that he or she did at one time. In most cases, an appraisal is not necessary and less verifications are required.   A minimum 640 credit score is needed, and borrower must be current on their payments with no

Buy Before You Sell Options

The decision to buy first or sell first, has always been a little of the "Which came first: the chicken or the egg?" type of question.   Is it better to buy another home before you sell your current one or sell the current one before you buy the replacement? Some buyers don't have a choice because they need the equity out of the current home to purchase the new one and possibly, their income limits their ability to qualify for having both mortgages at the same time.   However, some buyers, with sufficient financial resources, may have other options available to facilitate the move. A home equity line of credit, HELOC, is a type of loan that a traditional lender like a bank will loan up to the difference in what is currently owed on the home and 75-80% of the value.   A borrower is approved for the line of credit and then, can borrow against it as needed.   A homeowner with sufficient equity, would want to secure a HELOC prior to contracting for the new home.   Typic