A recent study predicts that 13% of the adjustable rate mortgages originated between 2004 and 2006 will result in foreclosure. That is pretty scary! If you have an adjustable rate mortgage, I'd like to offer you a FREE mortgage review. This entails meeting with me to review your mortgage documents, and a thorough review of the details of your mortgage, including a discussion of WHEN your rate will adjust, HOW MUCH it will adjust, and how this will change your PAYMENT. From there, we will consider when and if it would be appropriate to refinance your mortgage to make sure you don't get caught in a payment you can't afford.
Contact me by Friday, March 30 to take advantage of my Free Mortgage Review offer!
peter@mortgageMKE.com or 414.453.7620
Monday, March 26, 2007
Monday, March 05, 2007
Credit Scoring in Layman's Terms
The first thing I do when I meet with a new client is go through their credit report line by line. Here is the basics you need to know to make sure you have good credit!
There are five factors in credit scoring:
Types of credit: 10% A mix of credit is a good thing, but not very important in the grand scheme of things. Revolving credit (credit cards and retail credit cards) are fine if managed well. I recommend avoiding retail cards if possible. Better to have a few universally accepted credit cards than a bunch of retail cards to keep track of.
New credit: 10% Are you shopping for credit? If so, you represent a greater lending risk. Opening new credit cards shows that you plan on spending money soon. Not a good risk factor to a mortgage lender. Do not open new credit cards if you are buying a home or car soon, as it can have a direct impact on the loan product/rate you qualify for. It is acknowledged that shopping for a home loan or car loan may be important, and accordingly multiple credit pulls for a mortgage within a 14 day period count as one pull. Same goes for auto lending.
Length of credit history: 15% Generally speaking, the longer you have been using credit, the better your score can be. This factor considers both a.) the single oldest current account you have, and b.) the average age of your accounts. Think of it this way: The longer you have been using credit, the more chances you have had to prove yourself as responsible, or conversely, the more chances you have had to screw it up.
Amount owed: 30% Are you maxing out your credit cards? If so, you are a risky lending prospect. Do you have balances on a whole bunch of accounts? Same deal. A balance on an installment loan (cars, student loans) or a mortgage is fine. However, the best kind of revolving credit is old, currently open, and has a zero balance. If you do have a balance, try to keep it below 1/3 of the available amount.
Payment history: 35% Have you been on time with your payments? Three elements: Recency, frequency, and severity. In other words, how long has it been since you made a late payment, how often have you been late, and how late have you been? Late payments do have a significant impact on your score, but the longer it's been since your latest oops, the less impact it has on you.
As always, feel free to contact me with any questions at: Peter@MortgageMKE.com
There are five factors in credit scoring:
Types of credit: 10% A mix of credit is a good thing, but not very important in the grand scheme of things. Revolving credit (credit cards and retail credit cards) are fine if managed well. I recommend avoiding retail cards if possible. Better to have a few universally accepted credit cards than a bunch of retail cards to keep track of.
New credit: 10% Are you shopping for credit? If so, you represent a greater lending risk. Opening new credit cards shows that you plan on spending money soon. Not a good risk factor to a mortgage lender. Do not open new credit cards if you are buying a home or car soon, as it can have a direct impact on the loan product/rate you qualify for. It is acknowledged that shopping for a home loan or car loan may be important, and accordingly multiple credit pulls for a mortgage within a 14 day period count as one pull. Same goes for auto lending.
Length of credit history: 15% Generally speaking, the longer you have been using credit, the better your score can be. This factor considers both a.) the single oldest current account you have, and b.) the average age of your accounts. Think of it this way: The longer you have been using credit, the more chances you have had to prove yourself as responsible, or conversely, the more chances you have had to screw it up.
Amount owed: 30% Are you maxing out your credit cards? If so, you are a risky lending prospect. Do you have balances on a whole bunch of accounts? Same deal. A balance on an installment loan (cars, student loans) or a mortgage is fine. However, the best kind of revolving credit is old, currently open, and has a zero balance. If you do have a balance, try to keep it below 1/3 of the available amount.
Payment history: 35% Have you been on time with your payments? Three elements: Recency, frequency, and severity. In other words, how long has it been since you made a late payment, how often have you been late, and how late have you been? Late payments do have a significant impact on your score, but the longer it's been since your latest oops, the less impact it has on you.
As always, feel free to contact me with any questions at: Peter@MortgageMKE.com
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