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!