Category Archives: Economy

What Does My Credit Score Even Mean?

What does my credit score even mean?

As we all know, credit can either help us turn our dreams into a reality or it can be the one road block that keeps getting in the way. What does my credit score even mean?

What is credit?

The credit scoring system was originally designed in the 1950’s to help lenders determine how well consumers could pay back borrowed money. While there have been many updates to how this system is used, the components of a credit score consist of these major factors:

  • Payment History – 35% Impact
  • Outstanding Credit Card Balances – 30% Impact
  • Credit History – 15% Impact
  • Inquiries or New Credit – 10% Impact
  • Types of Credit – 10% Impact

 

What can impact my credit score?

Paying off debts on time has the greatest positive impact on your credit score. Late payments, judgments and charge-offs all have a negative impact. Keeping lower balances on the open credit accounts you have is a sure way to keep that score going up! The longer you have positive credit history, the better. However, multiple credit inquiries in a short period of time, such as applying for multiple credit cards, can have a negative influence on your score. The type of credit you have is also a factor. Having a mix of credit, such as an auto loan and a credit card, is more positive than a combination of debt from multiple credit cards.

What if I don’t have any or enough credit?

There are simple ways to begin building credit history. Start establishing credit history by opening  a small line of credit with your bank or credit union and begin making minor purchases that can be easily paid off. Your bank may offer a secured credit card if this is your first time applying for credit. This type of card works like a debit card and will require deposited funds for purchases; just be sure your history will be reported to all three credit bureaus.

What if I have less than perfect credit when applying to purchase a home?

Knowing what is on your credit report is the first step. Obtaining a credit report will show which areas are helping your score and which areas need to be worked on. When applying for a mortgage, your loan officer will be able to see if there are any areas that need work to help you get on the right track for a future purchase.

Want to find out where you stand? Let’s get the conversation started.

https://alphamortgageapplication.com/

 

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Finding your Dream Home – Where to Start

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Modern, brick, condo, ranch, one-of-a-kind, wood, restored, single-family, two-story, updated, beachfront, contemporary, finished- the options are endless. If you’re reading this blog, chances are you’re about to embark on one of the most exciting experiences of your life- purchasing a home! Exciting, and a bit intimidating for first-time buyers. The home-buying process is different for everyone, but luckily we are compiling the best tips, research, and helpful information in the next few blogs to make the process as easy as possible for you. So where do you start? After you get pre-approved to show that you are a serious buyer, determine how much house you can actually afford, and get in the mindset to find your dream home, you need to get organized.

Here are the basic, but extremely important questions you need to answer to get on the right track of finding and buying your dream home:

  • What basic features do you want for your house? This may seem like a no brainer, but list out exactly what kind of house you want to live in with as much detail as possible. Once you list the basic features out, prioritize what is most important.
    • Home style (condo, ranch, two-story, etc.)
    • Architecture style
    • Landscape Needs
    • Bedrooms
    • Baths
    • Square Footage
  • Where do you want to live? Once again, it’s important to list out the state, city, neighborhoods, and areas you would be comfortable living in. Location. Is. Everything.
  • Think a little into the future… buying a home is a big commitment. Will you be expanding your family with kids (extra rooms, school districts, etc), will you still be at your current job (commute), and how long do you plan on staying in the house?
  • Needs + Wants – here’s the fun part. Now that you have the basics covered, what do you NEED in a house (non-negotiables) and what do you want in a house? Get on Pinterest, check out what you like, and write down as much as you can!

Once you know what you want, it’s time to go out and find that home (or create it)! Keep an eye out for our next blogs leading you through the rest of the home-buying process! Happy hunting!

 

The Importance Of Good Credit

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It’s no secret when we tell you that the better your credit score is, the easier your life can be. Your credit score is a three-digit number that represents how trustworthy you are from the perspective of someone that would lend you money for something like a loan or a mortgage. In fact, your credit is THE single most important determining factor from a lending perspective. Our economy runs on credit. So what is so important about those 3 numbers, and how does it impact your mortgage rates when you decide to buy a home? Here’s what you need to know:

  • Your credit report = Your financial report card. You want all A’s – Like we mentioned before, your credit score is a representation of how well you can handle your money, and can make or break a lender’s decision to approve you for a loan or mortgage, and impact your interest rates majorly. Your credit report is made up of how much money you’ve borrowed, your history of paying it back, and how much open credit is available to you. Here is what appears on your credit report: debts and a history of how they’ve been paid, public record information (tax liens, bankruptcies), bills referred to collection agencies, and inquiries made about your creditworthiness.
  • Credit score: Credit scores range from 300-850 points and are based on debt, amount of time you’ve used credit, debt totals, how often you apply for new credit, and types of credit you currently use based on information received from your credit report.
  • The higher your credit score, the lower your interest rates will be, and vice versa- The better your credit score is, the more banks and lenders can trust you, resulting in much lower interest rates for loans and mortgages. Don’t think interest rates are that big of a deal? Consider this- for a long-term credit loan such as a mortgage, interest alone can add thousands of dollars to your original buying price. Ouch.
  • Banks aren’t the only ones who look at your credit – so do landlords, employers, insurance companies, utility companies, phone companies, and more!

Having good credit is essential for having a healthy financial presence. So now that you understand how vital it is, check out these tips for improving your credit before shopping for a mortgage!

Credit Checklist Preparing for a Mortgage:

  • Start early – A year to a year and a half before you will be buying a home, do a deep analysis of your credit report. This will give you time to make minor changes to your score that can save you big bucks in the end when you start shopping for mortgage rates.
  • ALWAYS pay your bills on time- This is a given! It is also important and make an effort to pay more than the minimum balance if possible.
  • Have a mix of credit (auto, credit cards, student loans, etc.) – Lenders like to see a long and versatile credit history.
  • Keep a low balance – on any given credit card try not to use more than 30% of your limit.
  • Start saving now– It is ideal to try and aim to put a 20% down payment on your home, which requires a decent amount of cash upfront. Start bulking up your savings account now!
  • Don’t forget about closing costs!
  • Whatever you do- do not do these 5 things that will destroy your credit while looking for a mortgage!

When it is time to find a mortgage for your dream home, be sure to contact us so we can help make your dream rate a reality!

 

 

 

 

Recent Changes in USDA Rates

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If you’ve been in the market for a mortgage lately, you’ve undoubtedly heard a lot of commotion about the recent changes in USDA rates, and are probably wondering what this means for you, a person who is looking to purchase or refinance a home. On May 16, 2016, the USDA recently announced a series of changes that will make it cheaper and faster to refinance a USDA loan. We’re here to break it all down for you.

To begin, it’s important to understand what a USDA loan is. USDA loans are mortgages backed by the US Department of Agriculture as a part of its USDA Rural Development Guaranteed Housing Loan program. USDA loans have increased in popularity over the past few years due to their 100-percent financing program that helps approved lenders provide low to moderate-income households with an opportunity to own a home in a rural or semi-rural area (to buy it, refinance it, build it, rehabilitate it, improve it, or relocate another dwelling) with no down payment, reduced mortgage insurance premiums, and an attractively low monthly interest rate. No, you don’t have to be a farmer to obtain the loan, you just have to meet the following criteria:

  • Meet income eligibility
  • Agree to personally occupy the dwelling as your primary residence
  • Be a US Citizen, US non-citizen national, or qualified alien
  • Demonstrate the willingness to meet credit obligations in a timely manner
  • Purchase a property that meets all program criteria including location as defined by the USDA

The loans were created in 1991 to encourage homebuyers to live in rural and suburban areas in hopes of boosting the local economies and growth through more affordable housing options. So what do the new changes mean? Nothing but good news for those who qualify!

Starting June 2nd, 2016, homeowners current on their mortgages for the past 12 months will no longer be required to secure an appraisal, provide a credit report, or undergo a debt-to-income calculation when they refinance for a 30-year term, saving applicants both time and money.

Average savings are expected to be around $150 per month, with some borrowers saving up to $600 per month. When it comes to the changes, Rural Housing Service Administrator Tony Hernandez says “These changes reaffirm the Obama Administration’s commitment to middle-class Americans, and I am pleased that we continue to provide affordable housing to support thriving economies in rural communities. Helping homeowners refinance their homes to reduce their monthly payments and take advantage of low-interest rates will bring increased capital to rural residents and the communities where they live and work.”

Interested in seeing if you qualify for a USDA loan or refinance? Contact us today!

November Alpha Mortgage Recap

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Happy Holidays from your team at Alpha Mortgage! Tis’ the season to enjoy time with family in your beautiful new home! We are proud to serve the Wilmington, Charlotte, Jacksonville, Winston-Salem, Greensboro, Fayetteville and Asheville areas with the most competitive mortgage and lending services at the lowest rates. As we go into December, we invite you to check out the latest in real estate and mortgage news. And don’t forget – whether you’re on Santa’s nice or naughty list, we can make getting your dream home a reality!

November Housing Facts:

  • Most expensive place to live in America: Newport Beach, California.
  • Least expensive place to live in America: Cleveland, Ohio.
  • Google is now registered as a licensed mortgage broker. Though the company won’t be financing mortgages, it will aggregate quotes from local and national lenders it has partnered with, in order to help users find the best mortgage. It is important to recognize that the company will be paid by the mortgage lenders it has partnered with, so the “best rate” may not be just that. More to come once the model goes live.
  • Home prices increased, growing 0.1% for the month and 5.5% on a year-over-year basis from one year ago, according to the September house price index from Black Knight Financial Services.
  • President Obama signed a bill that caps the salaries of Fannie Mae CEO Timothy Mayopoulos and Freddie Mac CEO Donald Layton. According to the White House, President Obama signed the Equity in Government Compensation Act of 2015 on Wednesday. A statement from the White House states that the President signed S. 2036, the “Equity in Government Compensation Act of 2015,” which “suspends compensation packages approved for 2015 for the chief executive officers of (Fannie Mae) and (Freddie Mac) and any of their affiliates, and reinstates the compensation and benefits previously in effect.”

TRID For The Borrower- What It Means

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There are officially t-minus two days until ‘TRID Day’, and whether you are a potential borrower or an existing lender, there are no reasons to panic. On October 3rd, 2015, the TRID (also known as the ‘Know Before You Owe Rule’) Rule  will be implemented by the Consumer Financial Protection Bureau (CFPB) as a way to better inform and protect borrowers during the lending process. TRID (short for TILA-RESPA Integrated Disclosure) is the merging of the Truth In Lending Act and Real Estate Settlement Procedures Act that aims to make the mortgage process more streamlined and highly functioning for regulators, borrowers, and lenders. Its goal is to create a more informed and therefore better protected consumer through regulated time constraints and clear, comprehensible documents for the consumer-which is why the act has attained the nickname ‘Know Before You Owe’.

The change comes in a time where transparency in every industry is essential for consumer trust and transaction, and when the Real Estate Industry has a need to shift priorities from stimulating the economy towards borrower comprehension in the lending process (seeing as it is one, if not THE biggest financial decisions they will make in their lives). The idea is that more time and more consumer-friendly documents will create breeding grounds for an all around more informed borrower.

So what specifically is changing under the TILA Act, you ask? Not too much. Here are the biggest two changes in the process:

1) Loan Estimate– As Rayce Robinson explains, what was originally the Good Faith Estimate has now changed to become the “Loan Estimate” or LE. The LE is created at the beginning of the lending process following the application submission of the borrower to their preferred lender and provides potential borrowers with a clear and accurate disclosure of any estimated fees during the lending process. The LE breaks things down for the buyer as well as makes it easier for buyers to compare estimates between firms.

2) Closing Disclosure– The Closing Disclosure, or CD, replaces the HUD-1. The CD is a detailed and accurate disclosure of every fee needed to close. The main difference with the CD is that lenders are required to provide borrowers with the document 3 days prior to closing to give them adequate time to compare the document to the LE as well as ask any questions they may have. Since last minute changes tend to occur when buying a home, after the borrower signs off on the CD, the lender need not add additional 3 days for changes unless they fall under three exceptions. 1) The last minute change caused APR to become inaccurate, 2) Borrower wants to change loan program, or 3) a pre-payment penalty was added to the loan.

The idea is to integrate the 3 days, not add them- something that will require planning, focus, and organization from all parties involved in the lending process.

TRID is going to be a refreshing change for the consumer in the Mortgage industry, and the biggest takeaway a potential borrower can get from the change is that there will be more transparency in a more simplistic fashion. It is important to find a lender who is trained, has tested, and integrated TRID methods into their practice- and at Alpha Mortgage, our loan officers are trained, tested, integrated and PREPARED to provide you with the best experience possible. Contact us today!

*Note: If you are looking to secure Home Equity Lines of Credit (HELOCs), a reverse mortgage, or a mortgage secured by a mobile home or dwelling not attached to real property, it is important to recognize that TRID won’t apply to you. *

Mortgage Market Update

Housing news dominates the headlines this week. The Commerce Department reported on Tuesday that sales of newly constructed homes rebounded in April, up from the dip in March, as the spring buying season got underway. New Home Sales rose by 6.8% to an annual rate of 517,000, which was above the 510,000 expected. Since April 2014, sales are up a whopping 26%. The median price for a newly constructed home in April was $297,300, up 8.3% from a year ago. The report comes after a contrast in Existing Homes, which makes up a bulk of the market, which fell 3.3% in April.
Data from the Case Shiller 20-city Index on a year over year basis revealed that home prices rose by 5% from March 2014 to March 2015. Home prices have now risen year-over-year for 35 consecutive months following the housing bubble bust in 2007 and 2008. The 5% gain was above the 4.6% expected, while matching the February annual gain. From February to March, prices were up 0.9%. “The pattern of consistent gains is national and seen across all 20 cities covered by the S&P/Case-Shiller Home Price Indices,” said David Blitzer, managing director and chairman of the index committee.
The last positive report today showed that May Consumer Confidence rose from April. The Index rose to 95.4 in May, above the 94 expected and up from April’s reading of 94.3. The report read that business conditions remained “good” last month, while the employment component said that those stating jobs are plentiful rose to 20.7% from 19%. The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch.

Mortgage Market Update 12-16-14

Home builder sentiment across the nation edged lower in December, but still remains robust as 2014 comes to an end. The National Association of Home Builders Housing Market Index fell to 57 this month, which was just below the 58 expected and down from the 58 recorded in November. Any number above 50 indicates that more builders view conditions as good rather than poor. Within the report it showed that current sales conditions and expectations for future sales declined, while the traffic gauge of prospective buyers held steady.

In another sign that the U.S. economy has improved from the depths of the Great Recession, the Federal Reserve reported on Monday that factory production rose by 1.1% in November from October. Output at factories has risen 4.8% over the past year, which is above levels seen before December 2007. Despite a global slowdown, the U.S. has continued to recover, led by a boost in auto sales, food, wood, plastics and rubber products.

Today is the busiest day of the shipping season for the U.S. Post Office and FedEx with just 10 days until Christmas. The nation’s largest shipper, the Post Office, says it will process 640 million pieces of mail on Monday, up 33 million from last year. The Post Office further reported that between Thanksgiving and Christmas, it expects to deliver 12.7 billion cards, letters and packages. FedEx reports that it will ship 22.6 million packages on Monday while it will deliver 290 million packages during the same period, up 9% from 2013.