Early on in the home buying process, you should review your credit situation. That way, if you need to improve your credit score, you can start right away.
Improving a credit score takes time, so you want to find out where you stand by (A) obtaining your credit report and score, (B) comparing yourself to the national average, and (C) working to improve your credit score if necessary.
Here are some resources to get you started:
10 Ways to Boost Your Credit Score
This excellent article is written by a mortgage expert, and it provides specific advice on how to improve your credit score in advance of buying a home.
Improving a Credit Score
Here we have gathered advice from BankRate.com, CNN Money, and a wealth of other expert sources.
All About Your Credit Report
Your credit report is different from your credit score. Banks use your credit report to create your credit score, which determines how likely they are to loan you money. This article explains the credit report in more detail, also providing instructions on how to request and review your credit report.
Remember, the better your credit score, the better your chances of qualifying for a mortgage at a good interest rate. So be proactive in maintaining good credit. Start early and focus on the long-term.
Happy home buying!
http://homebuyingtips.statesmanblogs.com/
Thursday, July 19, 2007
Subprime Mortgage Loans - A Borrower's Guide
Subprime mortgage lending and loans have certainly been in the news a lot lately. They usually tag along with a news story about the current spike in home foreclosures. In fact, I saw a story about it just a few days ago on KVUE.
There are many reasons that people default on mortgage loans and go into foreclosure. So it's not really possible to blame any one factor. But one thing is perfectly clear -- there is a connection between subprime mortgage lending and the number of foreclosures in the Austin area (and beyond).
Adjustable rate mortgages (ARMs) are aother piece of the puzzle. I call it the subprime-ARM-foreclosure triangle, and it's partially responsible for the current spike in home foreclosures.
So what are subprime mortgage loans, and how do they relate to foreclosures? And if you find yourself in a subprime lending situation, how can you protect yourself from becoming another foreclosure statistic?
http://homebuyingtips.statesmanblogs.com/
There are many reasons that people default on mortgage loans and go into foreclosure. So it's not really possible to blame any one factor. But one thing is perfectly clear -- there is a connection between subprime mortgage lending and the number of foreclosures in the Austin area (and beyond).
Adjustable rate mortgages (ARMs) are aother piece of the puzzle. I call it the subprime-ARM-foreclosure triangle, and it's partially responsible for the current spike in home foreclosures.
So what are subprime mortgage loans, and how do they relate to foreclosures? And if you find yourself in a subprime lending situation, how can you protect yourself from becoming another foreclosure statistic?
http://homebuyingtips.statesmanblogs.com/
Home Foreclosures Still Rising
In a previous post, we talked about buying a foreclosed home in Austin. But as foreclosures continue to rise (according to the latest news from Bloomberg), I feel I should shift gears and talk about some of the leading causes of foreclosure ... in the hopes it will help prevent a few folks from becoming yet another statistic.
Definition of Foreclosure
Most of you probably know this, but we will start with the basics anyway. Basically, foreclosure is what happens when you can't pay your home mortgage loan and the bank takes over the property. It is a legal process in which the mortgage property is sold to pay the loan of the defaulting (non-paying) borrower.
Common Causes of Foreclosure
Obviously, the root cause of foreclosure is always the same. For one reason or another, the homeowner(s) is no longer able to pay the mortgage. But there are other common factors that lead to this, which we will discuss.
But how can somebody qualify for a mortgage and then be unable to make payments?
This is a common question, for which there are two common answers: either (A) the person's income or debt situation changed after obtaining the mortgage loan, or (B) the lender qualified the person for a subprime mortgage loan with risky conditions associated with it.
Sure, there are more causes than these two. But both the federal government and the mortgage industry have conceded that subprime lending is a big factor in the current spike of foreclosures.
To learn more about this, read my tutorial on the subprime adjustable-rate mortgage.
The best thing you can do to avoid a possible foreclosure situation is to buy within your financial means. Use a free mortgage calculator to break the sale price down into monthly payments, then compare those payments to your budget, your current expenses, etc. Don't overstretch yourself, and don't make the common mistake of thinking, "Well, I plan to make more money soon, so I can get by."
If you can't afford a certain level of mortgage today, you shouldn't plan on being able to in the future. There's too much uncertainty and risk in that line of thinking.
http://homebuyingtips.statesmanblogs.com/
Definition of Foreclosure
Most of you probably know this, but we will start with the basics anyway. Basically, foreclosure is what happens when you can't pay your home mortgage loan and the bank takes over the property. It is a legal process in which the mortgage property is sold to pay the loan of the defaulting (non-paying) borrower.
Common Causes of Foreclosure
Obviously, the root cause of foreclosure is always the same. For one reason or another, the homeowner(s) is no longer able to pay the mortgage. But there are other common factors that lead to this, which we will discuss.
But how can somebody qualify for a mortgage and then be unable to make payments?
This is a common question, for which there are two common answers: either (A) the person's income or debt situation changed after obtaining the mortgage loan, or (B) the lender qualified the person for a subprime mortgage loan with risky conditions associated with it.
Sure, there are more causes than these two. But both the federal government and the mortgage industry have conceded that subprime lending is a big factor in the current spike of foreclosures.
To learn more about this, read my tutorial on the subprime adjustable-rate mortgage.
The best thing you can do to avoid a possible foreclosure situation is to buy within your financial means. Use a free mortgage calculator to break the sale price down into monthly payments, then compare those payments to your budget, your current expenses, etc. Don't overstretch yourself, and don't make the common mistake of thinking, "Well, I plan to make more money soon, so I can get by."
If you can't afford a certain level of mortgage today, you shouldn't plan on being able to in the future. There's too much uncertainty and risk in that line of thinking.
http://homebuyingtips.statesmanblogs.com/
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