Karen Church, your "Go To" gal at RE/MAX Integrity at www.eugenehomesgal.com discusses the question of "How does a low credit score affect my interest rate?"
Lenders estimate the ability to pay back money based on a credit score. The rick factor they take on is built in to your interest rate as a financing fee. There for a low credit score results in a higher interest rate, higher monthly fees, and a higher amount of interest being paid over the total life of the loan.
A borrower with a credit score of 620 would be questionable to an underwriter. While the lender may agree to provide financing, the increased interest rate is factored into the monthly payment. The chart below illustrates the difference in the amount of interest paid over the life of the same loan with three different credit score scenarios:
30-Year Fixed Rate with a Principal Loan Amount of $250.000
FICO Score APR Monthly Payment Interest Paid
Above 720 4.9990% $1,341 $232,590
700-719 5.1115% $1,360 $239,485
675-699 5.653% $1,444 $269,683
620-674 6.680% $1,630 $336,913
Below 620 People with scores below 620 are not usually accepted for this type of loan any longer.
What this means is that a borrower who increases his or her credit score from 620-720+can potentially save $289 per month on mortgage payments, $3,468 a year, andapproximately $104,323 over the life of the 30 year loan.*
(Source: http://www.myfico.com/myfico/creditcentral/loanrates.asp and Credit http://www.creditresourcecorp.com )
Stay tuned for Part 5: How Does the Underwriter View My Score?
Realtor Karen Church, your "Go To" gal at RE/MAX Integrity at www.eugenehomesgal.com discusses The Five Factors of Credit Scoring.
Credit scores are comprised of five factors. Points are awarded for each component and a high score is most favorable. The factors are listed below in order of importance.
1. PAYMENT HISTORY - 35% Impact
Paying debt on time and in full has the greatest positive impact on your credit score. Late payments, judgments and charge-offs all have a negative impact. Delinquencies that have occurred in the last two years carry more weight than older item's
2. OUTSTANDING CREDIT CARD BALANCES - 30% Impact
This factor marks the ration between the outstanding balance and available credit. Ideally, the consumer should make an effort to keep balances as close to zero as possible, and definitely below 30% of the available credit limit at least 2-3 months prior to trying to purchase a home.
3. CREDIT HISTORY - 15% Impact
This portion of the credit score indicates the length of time since a particular credit line was established. A seasoned borrower will always be stronger in this area.
4. TYPE OF CREDIT - 10% Impact
A mix of auto loans, credit cards, and mortgages are more positive than a concentration of debt from credit cards only. You should always have 1-2 open major credit card accounts.
5. INQUIRIES - 10% Impact
This percentage of the credit score quantifies the number of inquiries made on a consumer's credit within a twelve-month period. Each hard inquiry can cost from two to twenty-five points on a credit score, but the maximum number of inquiries that will reduce the score is ten. In other words, eleven or more inquiries within a six to twelve month period will have no further impact on the borrower's credit score. Know that if you pull your credit report yourself, it will have no effect on your score.
Remember that the credit score is a computerized calculation. Personal factors are not taken into consideration when a credit report is generated. It is merely a snapshot of today's credit profile for any given borrower. It can fluctuate dramatically within the course of a week.
Stay tuned for Part 4: How Does a Low Credit Score Affect My Interest Rate?
Karen Church, your "Go To" gal at RE/MAX Integrity at www.eugenehomesgal.com discusses The History of Credit Scoring. Did you know that you can obtain a credit report for free each year? Do you know why the importance of credit history was established? Read on:
Credit scoring has become a very hot topic, and for good reason. For many years people associated the concept of credit scoring with the need to purchase an item such as a home or car. Today, credit scoring goes much further. Your credit score can affect your ability to get a good rate on commodities such as car insurance, cell phones, or it can even determine whether or not you get a job or promotion. The financial look provided by the credit score has also become a gauge for many employers. Employers look at credit scores to seek to place employees in a position of management or financial responsibility.
The credit score system used today has evolved since the 1950's. It was originally designed to provide lenders with financial profiles on consumers who wanted to borrow money. The lenders' biggest concerns were whether or not an individual has the ability to repay a loan and to establish what percentage of risk might be involved.
Congress passed the Fair Credit Reporting Act in 1971 to establish guidelines for fair practices in regard to the use of credit scoring. This law was designed to promote accuracy in reporting and protect the privacy of consumers. In light of the increased use of credit scoring and a growing rear of identity theft, recent legislation has been passed to further protect Americans and improve consumer awareness.
The Fair and Accurate Credit Transaction Act of 2003 was signed by President George W. Bush on December 4, 2003. The amended Fair Credit Reporting Act, enables each American to obtain one free credit report every 12 months from each of the three main credit reporting agencies (CRAs): Equifax, Experian, and TransUnion. Those bureaus have created a central web site, www.annualcreditreport.com, to accommodate any American who wishes to obtain copies of their credit report.
Stay tuned for Part 2: Why is your credit score so important?
Karen Church, your RE/MAX Integrity "Go To" Gal at www.eugenehomesgal.com wants you to know that there are grants available to help homeowners with home improvements to reduce the risk of wildfire. If you live in Lane County you may be eligible for a grant:
Firewise Grants Available to County Residents
The grants are intended to help homeowners with home improvements to reduce the risk of wildfire. Lane County is offering a new financial assistance program that will pay residents to reduce their vulnerability to wildfire. The County's new Firewise Incentive Program provides cash incentives to residents who make landscaping and structural improvements to their properties, which may help protect their home in the event of a wildfire. Through the program, approximately $500,000 in grant funding will be available each year to partially reimburse costs that homeowners incur for the following types of improvements:
To learn more, visit www.lanecounty.org/firewise or call 682-6522 or contact: Lane County Land Management Division Associate Planner Keir Miller 682-4631, Keir.Miller@co.lane.or.us
Realtor Karen Church, your Eugene, Oregon "Go To" Gal at www.eugenehomesgal.com with RE/MAX Integrity explains that termites can be a silent destroyer of the most expensive item you possess: Your home! According to the National Pest Management Foundation, these insects are even more of a threat to wood based structures than flood, fire, or wind.
Homeowners usually don't notice these pests until the damage is done. Termites can take up residence in a home for years, or even decades before you notice any visual signs of damage. An average subterranean termite colony can consume one two by four per year. Thus winning the nickname "silent destroyer".
Termites can enter a home by slipping through a crack in the foundation, through window vents, and even roof joints. Older houses are inclined to be a higher risk because there is more likely a chance that the foundation may have a crack. Even new homes can be at risk if the builder didn't use pretreatments during construction.
So how can you keep these beastly critters from taking up residence in your home?
1. Keep moisture out. Make sure your downspouts and gutters are diverting water away from the homes' foundation.
2. Store firewood, mulch, and wood chips away from your home.
3. Keep landscaping shrubbery off of your home and be sure that they are not covering any vents.
4. Have proper ventilation in your crawl spaces to reduce humidity.
5. Be sure to eliminate gaps and cracks in attic vents, window joints, and even roof eaves.
6. Never leave old stumps or tree roots near your home.
As a home owner, one of your responsibilities is to keep your home structurally safe. Make sure you are scheduling regular Pest and Dry Rot Inspections. If you are unsure if there is sufficient air circulation under your home then be sure to hire a company to do a Pest and Dry Rot Inspection. Call your local Real Estate Agent for a recommendation in your area of a reputable Pest and Dry Rot inspector and pest management professional to treat any findings.
The right combination of food, moisture, and warmth can bring trouble to your wonderful home. I know that you don't want termites to devalue your investment! Be proactive!
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If you want to feel important, then I’m your "Go To" gal at www.eugenehomesgal.com.
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