Free annual credit report and why it is now so important to know your credit and know your score. Knowledge is power, and money!
I've read multiple free credit report blog posts on activerain.com regarding obtaining your credit report. And this post is a basic reminder of the same concepts, but I would like to expand on why now, more so that ever, it is important to obtain your credit report (and perhaps credit scores).
For first time home buyers, or for those who wish to refinance, who don't know what is on their credit report, go to http://www.annualcreditreport.com/ . This web site will allow you to obtain a free copy of your credit report from each credit reporting agency. You may also obtain your free reports by phone or by mail if you are more comfortable with doing it that way. I get upset when people tell me they heard the commercial on television, and they got their "free" report. It's not the same! IF you're going to pay for your credit reports, my personal preference is http://www.myfico.com/ . They have a more comprehensive service.
Knowing you're credit score, knows where you stand as far as actually obtaining financing. Generally, a score above 620, will be one that will allow you to obtain a conventional mortgage, but, that is of course you don't have judgments that are unsatisfied, or the public records (bankruptcy) that will affect your credit rating.
However, there is a hitch. I recently discussed in my blog whether it was a good time to purchase and obtain a mortgage on a home now . Well, certainly still is, but, your rate and eventual payment can be affect by the level loan price adjustments (llpa's) that Fannie Mae has instituted on its products. So, you will want to try to maximize your credit score.
Let's look at an example:
Refinance
80% loan to value, for this example, let's say the property is worth 200k, so the loan size will be 160k.
Single Family Home
Rate and Term Refinance, 30 year loan.
Credit score: 620
Hit to the rate by the LLPA = 1.75, Par rate on this loan would be approximately 6%, P & I payment: 959.28
The same scenario with a 690 credit score, the LLPA is: Zero; Par rate on this loan would be 5.375! P & I payment: 895.95
Difference in P & I payment: 63.33
Difference over the term of the loan: $22,618
Alright, well there is quite a savings both in monthly payment, as well as interest over the life of the loan.
Well, I know someone might be saying, what about FHA? Well, an FHA mortgage is not going to be as liberal as a conventional as far as any collection account or any adverse credit, and that might disqualify you from FHA.
Alright, there is brief overview of why the free credit report is important, and how is can affect your loan, whether you are a first time home buyer, or seeking a refinance.
Michael Sally - Victory Lending Group
http://www.mortgagesbymike.com/
Michael J. Sally - Victory Lending Group
608 E. McMurray Road
McMurray, PA 15317
Phone 724-941-6814 x202
Fax 866-484-5106
Toll Free 877-562-6643 x202
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