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  1. Renting versus Owning: The Scales Are Tipping to Ownership

    By on August 26, 2009

    rent-or-buy

    For most, the biggest part of the American dream is owning a home. For those Americans who are currently renting, the scales are beginning to balance and shift toward homeownership in the great debate of whether to rent or buy a home. Besides building equity for the future, the three major components that are tipping the scales in the favor of homeownership are the declining values of homes, historically low mortgage rates and the federal government’s $8,000 tax credit for first-time homebuyers.

    For an additional $221 (estimated per an Associated Press analysis of 45 metro areas for the first quarter of 2009), renters can buy their own home. With the gap between a median-priced home and a median rent down to $221 from $777 just three years ago, this realization could signify a quicker conclusion to the national housing crisis if renters start buying up available housing. Some areas of the country have an estimated gap of approximately $100.

    As home values have continued to decline over a two-year period, the timing couldn’t be better for renters to delve into the realm of homeownership. The National Association of Realtors recently reported that the median home price in the United States peaked in 2006 at just above $230,000. Today, the median home price has fallen over 25% to well below $175,000.

    If this weren’t enough, current mortgage rates are still hovering near historic lows. Federal Reserve Chairman Ben S. Bernanke recently stated that he expects current mortgage rates to remain “exceptionally low for an extended period.” But don’t wait too long, as rates unexpectedly skyrocketed last month, but have since settled a bit.

    In addition to the historically low mortgage rates, first-time homebuyers can take advantage of the $8,000 federal tax credit. Only available until November 30, 2009, this tax credit can be utilized immediately, rather than waiting to file taxes at the beginning of 2010. It is important to note that this tax credit does not have to be repaid, unlike the tax credit from 2008 that was more comparable to an interest-free loan that must be repaid through tax returns over a 15-year period.

    So if you’re currently renting, don’t just throw your money away on rent. You owe it to yourself to at least take a look at the possibility of owning your own home.

    –Robert Hyder

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    Category: Adjustable Rate Mortgages, Condominium, Credit Score, Current Mortgage Rates, FHA, Fixed Rate Mortgages, General, Mortgage Broker/Banker, Mortgage Insurance, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Purchase, Stimulus

  2. FICO Credit matters. Why Credit score is like your vegetables?

    By on July 10, 2009
    credit-score-is-like-vegetable

    Relationship between Credit Score and Your Vegetables!

    Eat your vegetables!  If you don’t eat your vegetables how can you have any desert.  How can you have any desert if you do not eat your vegetables first.  I Hope I didn’t lose you here.

    As redundant as the above statement is. We have all heard the above statements from our parents when we were youngsters and I am sure most of us with children have also repeated the above phrase in one context or another to them.

    Well, your credit is like your vegetables.  It is also called FICO credit. It will determine if you are approved, how much you may be approved for, how much of a down payment you may or may not have to put down on a purchase and also determine your mortgage interest rate, which will have a direct impact on monthly payment disposable income and therefore how much you may have to spend on desert of life.

    Please get at a minimum,  annual copies of your credit report so you may stay on top of your credit ratings and also correct any incorrect information on your credit.  Mortgage guidelines are getting tougher and tougher. While conforming loans are a lot more stricter than let’s say FHA loans, I have started seeing some lenders raising their lowest minimum credit score for FHA from what was once not an issue at all to the current credit scores of 620 and in the last few days some lenders are rising the minimum for FHA to 640 even 660

    Learn more about FICO Credit Score

    Category: Credit Score, Refinance

  3. What’s in a Credit Score?

    1 By on May 1, 2009

    by Robert Hyder

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    In the realm of mortgages, a credit score is one of the most vital pieces to the equation regarding loan approvals. Credit scores range from 300 to 850 and are calculated using a variety of sources represented on a credit report. The data on the credit report is typically arranged into five categories, with each category’s value based on percentages. The percentages below reflect the importance of each category in determining a credit score for the general population. For people who have not utilized their credit for a long period of time, the percentages below tend to be somewhat skewed.

    •    Payment History (35%)

    •    Balances Owed (30%)

    •    Length of Credit History (15%)

    •    Types of Credit Utilized (10%)

    •    New Credit (10%)

    Credit scores are generated using a formula based on the information detailed within the credit report. Credit scoring agencies such as Equifax, Experian and TransUnion compare the information in each credit report to millions of other people and determine a credit score with a high degree of accuracy, predicting how likely someone is to pay their bills. The majority of Americans have credit scores between 600 and 800, with a credit score of 720 or higher securing the more favorable rates and terms on a mortgage loan.

    The bottom line is that it pays to have a favorable credit score, literally. The higher the credit score, the lower the mortgage rate. Based on the pricing of a nationally prominent mortgage lender, on a $250,000, 30-year fixed-rate mortgage with an LTV of 80%, the difference in a credit score of 660 and 740 is $214 in a monthly principal and interest payment, or more than $77,000 over the life of the mortgage loan.

    Category: Credit Score, Current Mortgage Rates, Fixed Rate Mortgages, General, Mortgage Rate Trends and Analysis

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