A good credit score is important for more reasons than just obtaining new credit. These days, it can factor into everything from landing a new job to getting the best deal on your insurance policies. It's more important than ever to avoid late payments on your mortgage!
A 100 point drop for one late mortgage payment? It’s true. A single 30-day-late mortgage payment can cause your score to drop by as much as a hundred points. Credit scoring algorithms vary based on many factors, and in some instances, the damage may be even greater and last for years.
The costs accumulate. At the time, a single missed payment will cost you only a late fee, but the expense really adds up on your next loan or missed opportunity. Low credit scores typically mean a higher rate and cost. Higher rates can mean hundreds or thousands of dollars of extra expense over the life of a loan.
Missed payments are usually unplanned. Usually, events beyond our control lead to late payments, such as an accident, illness, job loss or family issue. At other times, carelessness or a hectic life may result in a forgotten payment.
What can you do?
Little other than time will decrease the negative impact of a late payment, so prevention is the one sure remedy. If you don't already have a good system in place to assure timely payments and are not sure what's best, reach out anytime. We'll be happy to help set up a plan that's right for you.
We may not be comparing real apples and oranges, but we’re coming pretty close in the home financing industry. And if you’re at all interested in using your home’s equity to access cash, then this comparison is for you.
As we discussed in our last email, there are two common ways to get cash from your home—a Home Equity Line of Credit (HELOC) or a cash-out refinance.
In the current environment, many people want to keep the great interest rate they already have on their home loan, so they automatically choose a HELOC over a refinance. But wait—there’s a big difference that can make the benefits hard to compare at a glance. HELOCs have adjustable interest rates, whereas most home loans are fixed.
Take a look.
Jason, this is the last communication in my series about HELOCs. Thank you for allowing me to send you information these last several weeks. I hope you’ve found it valuable.
If you’re interested in exploring your options more or you have questions about home financing, please reach out. I’ll be happy to help.
Today’s rates
New Home Purchase
Conforming Interest rate
30-yr fixed 3.20%
Rates are not static, they often change throughout the day.
If another lender offers a lower rate, there's a buy-down involved.
Often not mentioned when quoting the lower rate
Actual rates vary based on Loan Amount, Middle Credit Score, DTI, Term
Today’s rates based on a purchase 760 middle score, conforming loan, detached, primary residence, non-self-employed, detached, primary home
With talk of a partial government shutdown, here is what you should expect with any upcoming closings.
Chances are good that a partial shutdown will not impact most borrowers. There are a couple of cases where we may see delays:
The most common Fannie Mae and Freddie Mac conventional loans should not be impacted, as long as the needed verifications have already been obtained or become available prior to settlement.
If you are concerned about a particular client, please reach out. I’ll be happy to review the specifics with you. Otherwise, we’ll do our best to keep things moving, even if Washington stalls.
30-yr fixed 3.250%
NMLS Number 863501
You have options when you finance a home. Here are some of the most common loan programs:
Conventional mortgages are the most common of all home loans. Fixed and adjustable-rate loans can be financed for 10 to 30 years, with lower payments for longer terms. Down payments can be as little as 3% or 5%.Federal Housing Administration (FHA) loans often allow more credit and qualification flexibility for low- and moderate-income borrowers. Interest rates are competitive with conventional loans, but mortgage insurance requirements can lead to more expense over the life of the loan. A minimum 3.5% down payment and possible seller contributions toward fees can keep total upfront expenses relatively low.U.S. Dept. of Agriculture (USDA) mortgages are generally thought of as a rural area loans, yet some smaller suburbs of metropolitan areas qualify too. Fixed rate loans are available for low- to average-income buyers, typically with no down payment and reduced mortgage insurance.Veterans Administration (VA) loans are available to veterans or active-duty members of the U.S. Armed Forces. The primary benefits include zero down payment loans, no monthly mortgage insurance, and flexibility in qualification. Terms vary based on service history and eligibility.Jumbo mortgage loans are much like conventional financing, except they can exceed those loan limits. Down payment requirements start at 5% but will be higher for larger loans.
Escrow accounts provide for the timely payment of taxes and insurance on your home. This prevents tax liens, loss of property and any lapse of insurance coverage.
As part of your regular mortgage payment, 1/12th of the annual cost is collected. These funds are held and paid out as bills come due. If taxes are $5,000 and insurance is $1,000 for a total of $6,000, you’ll pay $500 into escrow each month. The balance will build until an outgoing payment is made.
The minimum required balance is usually a two month cushion to assure that sufficient funds are in the account even if payments are interrupted.
The minimum is different from the starting amount to make sure sufficient funds are available to make the first tax or insurance payment when due.
So how does an escrow account help you?
You have a consistent monthly expense instead of large bills a few times per year.
The money in the account is always yours. You receive any remaining balance at sale or refinance.
You might enjoy more competitive interest rates. Loans without an escrow account will often incur a price adjustment.
If you have questions about escrow accounts or mortgages in general, please give us a call. We’re here to help.
Shawn SmithMLO/Broker | NMLS # 863501(214) 396-3650 | Mobile: (817) 706-8619shawn@sublimefinancial.comwww.sublimefinancial.comSublime Financial, LLC14785 Preston Rd Dallas TX 75254
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