Coming back to an oldie but a goodie...I got these tips from Suze Orman. Love this book, Young, Fabulous and Broke. If you don't already own it, I suggest getting it.
1. Check your credit reports at least once a year to make sure there are no mistakes that could make your FICO score lower. You can get one free from each credit bureau at http://www.annualcreditreport.com/. You wouldn't believe the amount of people that I have given credit reports to and they don't know what a debt is. It is very important to know what you are working with.
2. File a fraud alert with a credit bureau if you think you are a victim of ID theft.
3. Complete an ID fraud affidavit if your account has been stolen or "borrowed" by a financial criminal.
4. You can also check your FICO score on http://www.myfico.com/. If your score is below 760, there are things you can do to change it over time.
5. Pay your bills on time, even if it is just the minimum, to keep your FICO score strong. This is one of the things you CAN NOT change on a credit report. The only thing that will fix this issue is time.
6. Do not cancel your credit cards as a way to improve your FICO score. It may actually cause your score to drop. This is another thing that is irreversable. Once you have your credit card paid off, just cut the card up. You don't HAVE to use it, but if you cut off that line of credit, you are shooting yourself in the foot. On the other hand, DON'T go and open a ton of credit cards!
7. Keep your mortgage shopping under a 2-week period, so your FICO score will not be negatively affected. Everyone says that if you have a lot of inquiries on your credit report, that your score will go down. This is true...if you are opening up a lot of different lines of credit. If you are shopping around for a loan, you should be fine.
8. Keep a partner with a low FICO score out of the mortgage.This will ensure that you are able to get a better interest rate, which will save you a lot of money over time.
9. Pass down your FICO score to your kids. One of the best ways to educate your children on smart financial management is to send them off to college with a great FICO score and an appreciation of why that's a very big deal. Add a child to your card and they will inherit your credit profile.
Friday, December 17, 2010
Thursday, December 16, 2010
Today's Mortgage Rates - trending higher
Why have rates been trending higher and what does make them rise or fall? Is it the Fed? Inflation? The banks? Fannie Mae or Freddie Mac? Is it is secret conspiracy?
The answer is that it rates move based on a number of related factors, including you and me, the consumer or the "end investor".
Mortgage money can come from a variety of sources. Most of it comes from investors called "capital markets." This is where investors interested in purchasing debt instruments (bonds) come to buy these products. Sellers must attract these buyers by competing with a variety of products with different rates of risk and return over given periods of time. Many of these products include US Treasuries, corporate bonds, foreign bonds, etc.
Who is the "end investor"? Consumers are the end investor. If you are buying bonds, and let's say stocks are paying more, will you keep your money in bonds? The answer for most people is no, depending on the risk versus return. So, when people take money out of the bond market, rates will then rise. And, vice versa, when people take money out of the stock market and put it into the bond market, rates will get lower.
This is the easiest way to explain the market for mortgage rates. This makes up most of the explanation. There are also other factors involved, but it is mostly based on the bond market, which is controlled by the "end investor" meaning the consumer.
The answer is that it rates move based on a number of related factors, including you and me, the consumer or the "end investor".
Mortgage money can come from a variety of sources. Most of it comes from investors called "capital markets." This is where investors interested in purchasing debt instruments (bonds) come to buy these products. Sellers must attract these buyers by competing with a variety of products with different rates of risk and return over given periods of time. Many of these products include US Treasuries, corporate bonds, foreign bonds, etc.
Who is the "end investor"? Consumers are the end investor. If you are buying bonds, and let's say stocks are paying more, will you keep your money in bonds? The answer for most people is no, depending on the risk versus return. So, when people take money out of the bond market, rates will then rise. And, vice versa, when people take money out of the stock market and put it into the bond market, rates will get lower.
This is the easiest way to explain the market for mortgage rates. This makes up most of the explanation. There are also other factors involved, but it is mostly based on the bond market, which is controlled by the "end investor" meaning the consumer.
Friday, December 10, 2010
Renting Vs. Buying - Stop throwing money away!
If you believe:
- Buying a home requires a large down payment.
- The monthly payments would be too much even if you qualified for a mortgage.
- The benefits of owning a home do not outweigh the benefits of renting.
Consider these facts:
- For first time home buyers, there are loan programs that require as little as 1/2% down payment.
- For all other home buyers, there are loan programs that require as little as 3.5% down payment.
- Interest rates are at an all time low and home prices extremely affordable.
- Equity is a great benefit of home owning as well as privacy, security, and tax deductions.
If you are spending $1,000 on rent, what does that mean in 5 years? It means that you will have spent $60,000 in rent.
If you are spending $1,000 for your mortgage payment each month, what does that mean in 5 years? It means that you will have built $20,000 in equity, and if homes start appreciating, you will have been investing your money. Not to mention, all of the interest you will have paid is tax deductible!
If you have a steady job and are renting, you should consider buying a home. If you would like me to compare what you are paying in rent to how much home you can buy, give me a call or email me. I'm happy to help you decide if it is a good decision to buy a home or not.
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