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Bumpy Credit? Don’t close all of your credit accounts!

Categories: Credit and Lending | Posted: September 23, 2010

Another reason that people who want to buy a home can’t is that while they were working on their credit themselves, they closed all of their credit accounts.  One thing that can make a big difference to your credit score is to not have any revolving credit.  Lenders want to see that you can charge it up and pay it off.  Or at least, make your minimum monthly payment.  So, even if you have worked tirelessly to get your credit above 620, you might not be approved if you don’t have any open credit lines.  So what do you do if you have closed all of your credit lines?  Open a secured card.  You can search for these on line and they require a deposit up front.  Whatever the deposit requirement is, that’s your credit limit.  Don’t go all crazy and charge it up to the limit.  There is no point in opening a new trade line and maxing it out.  Keep your balance to 30% of the maximum.  On a $500 secured card that is a balance of no more than $150.  Buy some gas, put the gym membership on it and pay it off every month.  The good thing about secured cards is that they start reporting to the credit bureaus pretty quickly and will help to raise your score when you need it done in a jiffy.  Need more help with this?  Call one of our sales offices and we might just surprise you with how we can help! 1-800-ANTARES

Mortgage Insurance Premiums

Categories: Credit and Lending | Posted: September 21, 2010

What are they and why should I even think about them?  According to Wikipedia (love Wikipedia) it is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan.  When someone is foreclosed on, that’s a default of a mortgage loan.  On an FHA loan, which is the type most used by our buyers, the buyer must pay a mortgage insurance premium at closing.  This premium is often split into upfront fees and monthly fees.  The upfront fees are part of closing costs and, for our buyers, are usually rolled into the mortgage amount.  The monthly fees make up a part of the monthly house payment which also includes the principal, mortgage interest and escrowed taxes.  Since increasing the mortgage amount and increasing monthly premiums would greatly affect the monthly mortgage payment a customer makes on a $100,000 mortgage, you can very quickly see why you would want to pay attention to this.  HUD issued a letter #2010-28 stating that it would decrease the upfront premium to 1% of the loan amount and increase the monthly premiums which will have a direct effect on the monthly payment.  On a $100,000 loan that would be about $22/month difference.  If you can get on contract before October 4, 2010 and get you loan in process, this will not affect you.

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