Tag Archives: 15 year mortgage

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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Which Loan Type is Right for Me?

Searching for the right loan program

Cutting Through the Confusion

Getting lost in all the mortgage lingo? You are not alone. According to a study performed by the Mortgage Bankers Association of America, “many borrowers say they get too much information when they go through the home-lending process…” Working with an experienced mortgage lender will save you a world of frustration by cutting through all the confusion. Your Lender will present the relevant information to get you on your way to moving day!

Which Program is Right for Me?

When purchasing a new home, a little research can go a long way. Asking the right questions will help us identify the right program that meets your needs.

  • Are you a first-time homebuyer?
  • Are you active or retired military?
  • Where is your future home located?
  • Which government programs do you qualify for?\

Common Loan Programs

You may have heard of these common loan programs: Conventional, VA, FHA, USDA, ARM (Adjustable Rate Mortgage), Jumbo…but what do they mean?

Conventional

The conventional mortgage is the most commonly used loan program for borrowers with good credit and steady income and can be used for purchasing a primary residence, second home or rental property. Conventional loans do require a down payment that can be as low as 3% of the purchase price of the home. PMI, or private mortgage insurance, is required when the down payment on the home is less than 20%. After 20% equity has been built up, the loan becomes eligible to have PMI removed.

VA

As a thank you in advance for those who are currently active duty, retired military or eligible reservists, this loan program offers veterans 0% down payment! The VA loan is guaranteed by the Veterans Administration and is government insured. Rather than having a monthly mortgage insurance fee, this loan program has a VA funding fee that is calculated into the initial loan amount. For borrowers who are considered disabled, the VA funding fee is waived entirely.

From all of us here at Alpha Mortgage Corporation, thank you for your service!

FHA

Insured by the Federal Housing Administration, the FHA loan requires a down payment as low as 3.5% and comes with a maximum loan amount that is determined by the location of the property. The FHA loan is helpful to borrowers who may have a higher debt to income ratio and allows for less than perfect credit. The FHA loan program does require PMI, or private mortgage insurance.

USDA

The USDA loan is insured by the US Department of Agriculture and is offered if your potential property is located in a USDA acceptable rural area. One of the benefits of the USDA loan is that it offers 0% down payment. Check here for USDA eligibility and income limitations: https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do;jsessionid=12MOUsHhXtG476sIGOnK5FRY#

JUMBO

The Jumbo loan is meant for loan amounts exceeding $453,100. In order to qualify for the Jumbo loan, borrowers must have a higher credit score.

 

To keep up with all things mortgage, housing, and real estate related, be sure to subscribe to our blog! Here at Alpha Mortgage, we’re proud to be North Carolina’s #1 mortgage company. Contact us today to make owning your dream home a reality.

 

Should I choose a 15-Year Mortgage or a 30-Year Mortgage

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So you’ve found your dream house, and have decided to start the lending process so that you can own the keys and start making it a home. Congratulations! Once you’re sure that you can afford the home, and have found an informed and transparent loan officer, the next thing as a buyer that you need to consider is whether you should choose to secure 15 year fixed mortgage, or a 30 year fixed mortgage. When determining which loan option is best for you, it is important to weigh out the differences in affordability, your degree of job security, as well as your saving habits.

The main difference between a 15 and 30-year loan is that fifteen-year loans typically have higher monthly payments with less interest, and thirty-year loans usually have lower monthly payments in which you end up spending more interest over time. The first step in determining which term to choose is using a mortgage calculator and crunching the numbers to figure out your specific individual options and the difference in monthly payments and total amount spent. Then, ask yourself what you can honestly afford. If you can comfortably make the 15-year fixed mortgage rates, do so. If not, the 30-year option is probably best for you. Remember that making extra payments when possible is always an option (although according to the FDIC, 97.3% of people do not consistently pay extra on their mortgages).

It is also essential to evaluate your job security and emergency funds when determining which loan to choose. Are you in a position/job with a paycheck steady enough to make those payments every month? It is important to remember that once you sign the loan, you will be required to make the same payment each month, and if you choose to go with a higher monthly payment (15-year loan) it is a good idea to have an emergency fund in place just in case something happens. If you don’t have adequate savings in place, or lack an emergency fund, it is a safe bet to go with a 30-year option.

Financial saving habits are also important to consider when determining whether to go with a 15-year or 30-year loan. Before choosing which term you want to have your loan on, evaluate your spending habits. According to USA Today, many people may lack the discipline needed to save long-term, especially in amounts that would offset what they would save by switching (from a 30-year) to a 15-year mortgage. A lot of times people need that extra money for something else, so they choose to keep their money in a 30-year mortgage with lower individual monthly payments. It is important to realize that you can always pay more of your mortgage off monthly, however, many people lack the discipline to send in the extra money every month when it isn’t required by the bank. If you are confident in your financial personal discipline, and do not tap into your savings (or will need to in order to afford a shorter term), a 15-year loan might be a good option to consider.

Be sure to consider your age and professional plan for the next 15-30 years when deciding whether you want to choose a 15 or 30 year loan. Are you planning on retiring? Do you plan on having children? What about other expenses that you will have (car, student loans, etc.)? Once again, it is important to answer these questions as honestly as possible, and to go over your options with your loan officer, who will be able to give his/her honest opinion based on individual circumstances and plans and which term will be best in your scenario.

Remember – in the end, your individual financial situation, goals, and comfort levels will determine which mortgage term you should choose, and what may be right for someone else doesn’t necessarily mean it will be right for you. However, a good rule of thumb remains: if you’re comfortable making higher payments (and have an adequate emergency fund), can meet other important financial milestones such as retirement and large expenses like cars and student loans, and have strong personal discipline when it comes to finances, a 15-year mortgage is a great option to own your home in half the time you would otherwise. If any of these conditions make you uncomfortable, it is better to go with the 30-year fixed loan and add in extra payments if you can. Let Alpha Mortgage help you make the right decision when it comes to choosing your loan term.