Doug Stalker

What is my score and why does it matter?

The idea behind credit scoring is the desire to have a "simple" way to evaluate the possiblily of a borrower defaulting on their obligation. Credit scores predict, or put odds on, the likelyhood that you will not meet the terms of the credit you are getting.

One of the most common questions we get on the Roseville CA Home For Sale blog about buying a home has to do with credit scoring; how scores are calculated and what effect they have on your ability to purchase a home.

What goes into my score? Your credit score is a composite of factors including payment history, how much you owe, how long you have had credit, how recently you applied for more credit and finally what types or mix of credit you have. Here is a break down of the impact of each of these factors on your score:

Payment History 35%

Credit Usage 30%

Length of History 15%

Inquiries 10%

Types of Credit 10%

Payment History; this makes perfect sense. The most important thing is that you pay your obligations on time. When looking at history the scoring computers focuses on three factors:

A. Recency - how recently you got into trouble

B. Frequency - as you might expect, someone with just one or two late payments looks better than someone with a dozen or more.

C. Severity - there is a definite hierarchy of badness. A 30 day late is not as severe at a 60 or 90 day late and collections, tax liens, judgements and bankruptcy are on another level all together.

Credit usage: the score looks at the total amount of credit outstanding versus the amount of your limit. The higher your "usage" the lower your score. For instance, if Roseville CA Homes For Sale was a credit card that two different people had, both with a limit of $5,000, if one had a balance of $2400 or less than 50% of the total available, their score would be better than a person with an outstanding balance of $3,000 or 60% of the limit.

History; this is the length of time you have had credit. This part has much less impact on your score than the previou two. Typically, the longer you have had credit, the better for your score.

Inquiries; having your credit checked. Opening new accounts can ding your credit. This part of the score takes into account a)how many accounts you've applied for, b)how many new accounts you've opened, c)how much time has passed since you applied for credit, and d)how much time has passed since you opened a new account.

Types of credit you use; the scoring computer is looking for a healthy mix of types of credit. To maximize your score it is best to have some of both revolving accounts (credit cards) and installment accounts (cars or mortgages).

This is a basic overview of credit scoreing and the factors involved. Check back in here from time to time or go to RosevilleCAHomesForSaleBlog.com for more.

In the next installment we'll talk about the common myths surrounding credit. We offer complimentary review and coaching for those interested in improving their credit picture. Email us at info@rosevillecahomesforsaleblog.com or call us at (916) 580-3478.

3% Down - No Mortgage Insurance - No Appraisal

Wow! Fannie Mae took a step towards taking their collective heads out of the sand by unveiling an aggressive financing program aimed at their rather vast inventory of REOs. The program allows buyers who will occupy the home as their primary residence to put as little as 3% down and they will finance the home with no mortgage insurance and they will not require an appraisal.

Primary Residence Highlights!

• 1- to 4-unit properties.
• Fannie Mae/Freddie Mac-eligible condominiums.
• Planned unit developments (PUDs).
• Modular homes.
• Manufactured homes (double-wide only).
• All properties must be designated by Fannie Mae as eligible for HomePath financing.
• Down Payment: 3%
• No Appraisal required
• Programs offered include 30, 20 & 15 year fixed rates and some Adjustable Rate loan

This is a significant savings for the buyer as compared with the most popular low down payment option of FHA. FHA requires an upfront mortgage insurance premium that is financed into the loan as well as a monthly mortgage insurance premium.

Investor Highlights!

• 90% Financing
• NO Mortgage Insurance
• No Appraisal
• Total number of financed properties is 10. If you own more than 4 financed properties the total financing will be limited to 75%.

Click Here to search for available properties in your area. For more information on qualifying your buyers or to explore other financing options you can email us at info@rosevillecahomesforsaleblog.com or call me at 916-580-3478.