Archive for December, 2007

Seasons Greetings!

December 27, 2007
It’s that time of year again…
christmas-forrest.jpg
Happy Holidays!
A Blog Pertaining to the Acquisition of a Mortgage
to Purchase A Domicile will be back and blogging in 2008.
Happy New Year!

Credit scores can talk. What are they saying?

December 19, 2007

When buying a home, we all want to choose wisely so that the house we buy today will appreciate in value and, in turn, will make a profit when selling the home. All of us like the idea of making money!

Lenders are in business to make money too. You may view a home as an investment, but lenders view you, the borrower as an investment. No matter what the commercials on TV or the radio say, lenders view credit scores as the risk associated with that investment.

So why is your credit score so important? Many people don’t realize that their credit score and credit history provide the lender clues regarding how good of an investment a potential borrower will be. In fact, right now credit scores seem to be so important that scores are being used by dating services when matching people!

You may be wondering, “what happens if I miss a payment?” If you are over 30 days late for a payment, it isn’t the end of the world. Lenders will never see a missed payment at 30 days because they don’t exist on credit report. However, being late by 60+ days is not a good idea because it gives the impression to the lender that the borrower may not pay back the loan.

So, what exactly does your credit score say? Higher credit scores contain very few (if any) late payments, and vice-versa. If your credit score is lower (620 and below), it means there are several delinquencies in your credit history, which puts you into a “higher risk” category. The end result is lower score = higher risk = higher rate AND higher rate = lower risk = lower rate.

 

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is this going on my record?

Think of your credit score as a driving history. If you have a lot of wrecks, get tickets, etc., your car insurance premium will go up. A worst case scenario… too many accidents and tickets could lead to the insurance company canceling your policy (from my personal experience at 16 years old, 2 accidents and 3 tickets within 18 months ought to do it). Credit scores and their impact on qualifying for mortgages work in a similar fashion.

Clay Jeffreys is a Mortgage Consultant with Hillside Lending, LLC and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.” Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing. For more information about available programs and interest rates, please visit www.hillsidelending.com.

 

yet another rate cut

December 11, 2007

The Feds cut the federal funds rate and the discount rate by 0.25% today. Typically, mortgage rates go up when the Feds cut rates. While that may seem odd (and it does), the main reason for this trend is inflation. The rate of inflation increases as the Fed rate decreases. Mortgage-backed securities (which dictate mortgage rates) hate inflation.

For more detailed information on this, check out this previous post from The Mortgage Blog.

With this trend in mind, I am sure the market reacted in a typical fashion. Well, no, it didn’t. Stock market investors were hoping the Feds would cut the rate by 0.500%. When the news of a 0.25% cut broke, stocks plummeted. The money that came out of stocks went into bonds, and mortgage-backed securities enjoyed a very good day.

If you look at the two previous cuts (9/18 and 10/31), the day of the Fed rate cut saw an increase in bond pricing only to see a sharp decline in the following days. It took several weeks for bonds to gain back those losses. It will be interesting to see how the market responds tomorrow. Was this a knee-jerk reaction to only a 0.25% cut, or will typical trends take over tomorrow?

The more things change, the more they stay the same.

December 7, 2007

dick clark

We have all heard this proverb, and it applies to the mortgage industry too. There have been a lot of changes this year. In fact, a better way to say it is “lender’s guidelines are a moving target” – at least for now. There are some people out there screaming from the hilltops that the “end of the mortgage world is near.” While this is definitely a serious topic, the subject merits its own post. OK, back to this post…

While there have been some changes, there are a lot of mortgage options that have not changed and are still available. Things that have not changed include:

1. Borrowers can still get 100% financing.

2. 1st and 2nd mortgages are still available. (80-20, 80-10-10, etc)

3. Mortgage rates are still at historic lows (some days under 6.0%).

4. Owning a home (with responsible financing) is better than renting.

5. “No doc” financing is still available.

6. Paying mortgage interest and property taxes still creates a tax advantage.

7. Borrowers with great credit can still get great mortgage financing.

8. Borrowers with good credit can still get very good mortgage financing.

9. Even borrowers with below average credit can still get reasonable mortgage financing.

In order to find the best loan program for you at the best rate, you need some great advice. To get solid advice, a great rate, and excellent service, you should consider using Hillside Lending (Yes, a shameless plug, I know :-).

Clay Jeffreys is a Mortgage Consultant with Hillside Lending, LLC and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.” Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing. For more information about available programs and interest rates, please visit www.hillsidelending.com.