Connect:

Monitor Your Credit Score & Improve Your Mortgage Rate

By Bob Pezzella, Newburyport.Com Correspondent
Why Bob Pezzella for your mortgage needs? Because my 19 years of lending experience coupled with the lending powerhouse that is Residential Mortgage Services, Inc. (RMS) we will streamline your mortgage and home buying process. After the crazy rate fluctuations of the late 1990s through the tumultuous 2000’s first decade and beyond I have navigated the mortgage process every step of the way for my clients. I pride myself on a thorough, consultative approach to understanding customer needs and goals and match your criteria with the parameters of available down payment monies and income level. Whether it makes sense to make a smaller or larger down payment, help raise a credit score, or pay off / refinance current debt, I will find the mortgage solution that is right for you. I will help you evaluate the array of mortgage options from the traditional 30-year fixed rate, through the various state housing programs to the government programs FHA, VA, USDA and together Residential Mortgage Services, Inc. (RMS) and I will guide you home!
Residential Mortgage Services, Inc.
credit score, Residential Mortgage Services, Newburyport, MA

I left off last time talking about how important it is to “be prepared” with respect to having your credit in order prior to applying for home financing.  Your credit score is so critical to your qualifying loan options and corresponding Annual Percentage Rate (APR) I feel compelled to briefly revisit the topic given the time of the year and recent political events.

We have just come through the holiday shopping season and many of us took advantage of large discounts at the cash register simply for agreeing to open a new store credit card.  Although the savings was great, these transactions inevitably lower your credit score:

  • The credit inquiry itself lowers your score.
  • The amount borrowed compared to the limit set by the store can further lower your score.
  • The number one zinger is if the store got your billing address incorrect when the cashier was keying your information in to the computer. Zip code or street number off by a digit and your bill goes to the wrong address, you potentially forget about the new account and miss a payment.

Please, exercise extreme due diligence in tracking down any of these new accounts and make sure these new bills get paid in a timely manner!

Recent national events are costing us more money too. Regardless of your political affiliation, national politics has affected the cost of borrowing money. The result of the presidential election  has  strengthened a bull market, trading off the idea that lower personal and corporate income taxes will stimulate the economy, coupled with the belief that deregulation has been constraining growth. The Dow Jones Industrial Average (DOW)  is flirting daily with a record 20,000-point level and the Federal Reserve Board (FED) raised its benchmark interest rate recently for just the second time since the financial crisis of 2008. These factors have helped inch up home interest rates costing new mortgage customers more money per month. Although there is little we can do about these national events, you can protect and monitor your credit scores ensuring that you qualify for the best interest rate available.  Consider this: a half- point difference in APR on a 30-year fixed rate $300,000.00 mortgage can cost $88.00/month more in your payment, $1,056.00/year and $31,680.00 more if you were to stay in the mortgage for the life of the loan.

Friends, my message here is very simple. Although credit is not the only qualifying lending criteria, good credit helps you qualify for the best rates and programs. If you need a hand assessing your credit and your qualifying criteria, I would be more than happy to assist you!

Secure Your Dream Home By Being Prepared

By Bob Pezzella, Newburyport.Com Correspondent
Why Bob Pezzella for your mortgage needs? Because my 19 years of lending experience coupled with the lending powerhouse that is Residential Mortgage Services, Inc. (RMS) we will streamline your mortgage and home buying process. After the crazy rate fluctuations of the late 1990s through the tumultuous 2000’s first decade and beyond I have navigated the mortgage process every step of the way for my clients. I pride myself on a thorough, consultative approach to understanding customer needs and goals and match your criteria with the parameters of available down payment monies and income level. Whether it makes sense to make a smaller or larger down payment, help raise a credit score, or pay off / refinance current debt, I will find the mortgage solution that is right for you. I will help you evaluate the array of mortgage options from the traditional 30-year fixed rate, through the various state housing programs to the government programs FHA, VA, USDA and together Residential Mortgage Services, Inc. (RMS) and I will guide you home!
Residential Mortgage Services, Inc.
Being Prepared with Residential Mortgage Services, Newburyport

Be prepared! A truly great motto, not only for the Boy Scouts of America, but also for anyone embarking on today’s new mortgage process. Through my own quest for Eagle Scout, the many rigors of the high school and college years, and on to gainful employment, marriage and raising a family, “being prepared” has always been a cornerstone of my life. If you’re beginning today’s mortgage process either as a first time buyer or as an experienced homeowner, I cannot stress this old motto enough!

The first step in getting prepared for your new mortgage is going through the “pre-qualification” process with your loan officer. Don’t wait until you are excited at an open house and want to make an offer on a new home or until you have the “for sale” sign on the home you are selling. Get organized well in advance!

My pre-qualification typically begins with a 10-minute phone interview. Here I gather all of the pertinent personal and employment/assets information so that I can be organized and efficient in our follow-up face-to-face meeting. In terms of your preparedness, we are going to want to assess two factors as soon as possible: your goal for a comfortable, affordable monthly mortgage payment and a thorough review of your current credit report.

Many people compare the amount of their present rent payment as a benchmark for a comfortable, affordable mortgage payment. The mortgage industry considers PITI or PITIMI (principal & interest, insurance, taxes, mortgage insurance and also condo fee if applicable) as “total monthly payment”. Utilities, cable, credit card, auto, student loans etc. are not a part of this figure but are obviously a part of your total budget. If you are living with family and do not pay rent or if you have a mortgage and are selling your current house I highly recommend giving this concept of “comfortable affordable monthly payment” some serious consideration. If you study your budget and arrive at “your monthly payment” then we can more effectively target a purchase price point that you should be shopping for.  This really maximizes your time and helps you not to over-extend yourself with a monthly mortgage payment.

The second step for your initial preparedness is a thorough evaluation of your current credit report. Today’s mortgage rates are tied to your credit or FICO score. Credit scores are tiered, for example 680-700, 700-720, 720-740 etc. and a score of 740 or higher helps you to qualify for the best interest rate. If you are near a tier cut-off there might be simple steps you can take to improve your score and help yourself to qualify for a better interest rate.  It’s also important to evaluate your credit beforehand because you may have errors on your report, trade lines that are in dispute, old medical or other collections, or even authorized use of a family member’s credit card that has a high monthly payment or late notice damaging both the amount of mortgage you may qualify for and your interest rate. If you have student loans that are in deferment these inevitable monthly payments have to be calculated as future debt. Many of these situations require your attention and can take a substantial amount of time to resolve.  If you take the time to be prepared you will get off to a much better start to your mortgage process and really enable yourself to focus on what’s most important – your beautiful new home!

Next time I’ll talk about down payments and sourcing funds, two other areas that compliment good home-buying preparation!

 

Skip to toolbar