1. Have the right credit score. Sure it seems like a "no-brainer", but nowadays credit is more important than ever! In the past the best deals required a score of 720. Now, they require a score of 740. With the state of the economy and many people losing jobs, having to short sale, or foreclose on their property... it's fair to say that there aren't a ton of people with this score. If you are one of many who have had a significant impact on their credit in the subsequent years, whether or not you plan to purchase a house within the next year, Contact me. I can get you in touch with a credit repair company that can get you back on track and fix your credit in as little as 90 days!
2. Protect and Preserve your Credit Score. Again, this is an obvious tip, but probably the hardest. It reminds of junior high and high school, when the teacher started off the year by stating, "You all have A's. It's up to you to maintain it." Consider hiring a company like Life-Lock, that can keep you up to date with any misuses or hits on your credit. This will give you the greatest chance of maintaining the credit score you've worked so hard to maintain.
3. Shop Around. Don't just look for who has the best interest rate. Consider the other costs- discount points, and even the type of loan. Is it an adjustable, fixed? Holden Lewis of Bankrate.com suggests comparing the total fees and monthly payments that you would make under 3 or 4 loan deals to figure which option works best for you and your family.
4. Know you're borrowing limit. The FHA suggests that your house payment should equate 31% of your gross monthly income. Some housing counselors suggest a safer 28% or 30%. Roughly, if your monthly income is $4,200 before taxes. According to the FHA percentage of 31% you can afford a monthly house payment of about $1,302. The monthly house payment includes the principal, insurance, taxes and association dues.
5. Don't "reset" your Refinance Calender to 30-years. In other words when you've lived in a property for 5 years, ask your lender to amortize the loan for the remaining years of the old loan. By shortening the length of the loan you end up saving money on interest that is automatically included in your monthly payment. It may raise your monthly payment, but in the long run will actually save you a lot of money.
6. Consider a "no closing cost" Refi. If you are fortunate enough to have positive equity in your home, but you don't have a lot of money around you may think you can't qualify for a refinance. Think again! With a "No Closing Cost" Refi you can get your loan refinanced and not pay anything out of pocket. Holden explains that you end up paying a slightly higher interest rate as the closing cost gets factored in to your monthly payment.
7. Small downpayment? See the feds. Most lenders require 10% of the home price to be used as a downpayment, refinancing requires at least 10% of equity to qualify. For those borrowers with good credit, try applying for an FHA loan. They only require a 3.5% down payment. If you are a veteran, apply for a VA loan, no down payment is required. For those who aren't veterans or won't qualify for an FHA loan go to http://www.americandreamdownpaymentassistance.com/state.cfm?code=NV.The American Dream Down Payment Act is a down payment assistance program that gives grants to assist low-to-mid-income families and uniformed employees such as, policemen, firemen, sanitation, maintenance workers, and teachers achieve homeownership. The link above is for the State of Nevada.
8. Small loans? Act early. In the past lenders were paid a certain percentage of the loan. The more money they lend, the more money they would receive. Changes made April 1st have since made it illegal for lenders to be paid this way. In the past those that needed smaller loans or loans less than $100,000 weren't given the time of day. Now, big lenders like Wells Fargo as well as the small independent lending brokerages are more willing to lend to these kinds of borrowers. Since there are many a home here in Las Vegas that is under $100,000, this change is an important change.
9. Make an extra payment any time of year! You've probably heard that an extra mortgage payment made at the end of the year will shorten the repayment time. This is true. But, you don't have to wait until the end of the year, how about sending in that payment after you received your tax return, or after a bonus? Not only will it save you interest and shorten your repayment, but may come in handy at the end of the year when we all tend to spend a bit more.
10. Behind on your payments? See a housing counselor. According to a study by NeighborWorks America, Delinquent homeowners who receive Department of Housing and Urban Development-certified foreclosure counseling are more likely to keep their houses and not lose them to foreclosure. When late-paying borrowers get counseling, they are more likely to get a mortgage modification, which can reduce their payments. Click here for Housing Counselors in Nevada. http://portal.hud.gov/hudportal/HUD?src=/states/nevada/homeownership/hsgcounseling
The most important factor when deciding on purchasing a property is to shop around! Talk to several lenders- ask about their interest rates, their fees, discuss your needs and find out how much home you can afford. These factors will all come to play when you are ready to purchase a home. Not only will it help aid in the type of home, area and how much to put an offer in on... but can be very helpful when we negotiate the offer- like when asking to have your closing costs paid by the seller!
For more information about the Credit Counseling company, or if you would like to speak with some lenders, please don't hesitate to contact me at kathy.herron@cbvegas.com.
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