Tom Spaniel

Preston Hollow Financial Services, Inc

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FICO Scores and Your Mortgage: How to Bump Your FICO Score to Secure a Better Mortgage Rate

September 3, 2021 by Tom Spaniel

FICO Scores and Your Mortgage: How to Bump Your FICO Score to Secure a Better Mortgage RateIs your credit score holding you back from getting the best rate on your next mortgage? The good news is that there are actions that you can take to increase your credit score and improve the interest rate offered on your next home loan.

Here are a few easy and effective tips to help you get your credit score to where you want it to be.

Increase The Amount Of Credit Available To You

The easiest way to increase your credit score is to increase your credit limit, as this reduces your utilization ratio. To do this, you can either apply for another credit card or ask a current credit card provider to increase your credit limit. Those who have a stable income and have made their monthly payments on time should have no problem getting an increase of their credit limit.

Pay Down The Balances On Your Credit Card

Paying down your credit card balances can help you increase your credit score, as a large portion of your score is determined by the percent of available credit that you are using. Ideally, you want each card balance to be under 30 percent of the total limit while also keeping your total credit usage to less than 30 percent of available credit. A utilization ratio under 30 percent tells lenders that you can manage credit responsibly.

Settle Past Due Debts

Roughly one-third of your credit score is determined by your ability to make payments in a timely manner. If you have any payments that are 30 or more days past due, you may wish to settle those debts or make arrangements to pay them.

Creditors who allow you to roll past due payments back into your loan may update your credit report to say that you are current on your payments. This could have a huge impact on your credit score and help you qualify for a better rate on a home loan.

Increasing your credit score is one of the best ways to get the best rate on a mortgage. This may enable you to gain additional leverage when negotiating for a better rate that may lower your monthly payment to a more affordable level.

For more information about how to get a great mortgage rate for your next home purchase, or for advice on how to improve your credit score, contact your local mortgage professional today.

Filed Under: Mortgage Rates Tagged With: FICO Scores, Mortgage Affordability, Mortgage Financing

3 Reasons Why the Lowest Mortgage Interest Rate Isn’t Always Your Best Option

May 18, 2021 by Tom Spaniel

3 Reasons Why the Lowest Mortgage Interest Rate Isn't Always Your Best Option One of the more common methods that home loan applicants use to find the best loan program available is to compare interest rates, but choosing the lowest rate possible is not always the best option available. In fact, in some cases, it may be one of the least advantageous options when all factors are considered. With a closer look, home mortgage applicants may decide to review other factors in combination with the interest rate to make a more informed decision when applying for a new loan.

The Closing Costs Impact The Rate

It is important to note that lenders can increase or decrease the interest rate with adjustments to closing costs, and this means that some of the lowest interest rates available may also have some of the higher closing costs. In some situations, choosing the lowest interest and paying more in closing costs is acceptable. However, a loan applicant should be aware of this and should compare interest rates along with closing costs in order to find the best loan program available.

The Loan Term Affects The Rate

Generally, a shorter loan term will have a lower interest rate. However, even with the lower interest rate, the mortgage payment may be higher due to the shorter term. A higher mortgage payment can impact affordability as well as loan qualification in some cases, and there are instances when the higher interest rate associated with a longer term is most desirable.

The Interest Rate May Adjust

Adjustable rate mortgages typically have lower interest rates than fixed rate mortgages, but the interest rate with an ARM may adjust higher in the future. For those who only plan to own the home or to retain the mortgage for a short period of time, this may be acceptable and even desirable. However, for those who plan to own the home or retain the mortgage for a longer period of time, the potential for a rate adjustment in the future may not be preferable.

For individuals who are shopping around to compare interest rates and to find the best deal on a mortgage, there may be a desire to opt for the lowest interest rate, but this is not always the best strategy. The interest rate can reflect many aspects of the loan, and each of these points should be analyzed to find the best loan program. A mortgage broker can provide assistance comparing loan terms and helping loan applicants determine which is the best solution for their needs.

Filed Under: Mortgage Rates Tagged With: Home Mortgage Tips, Interest Rates, Mortgages

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