Today's Buyer Beware Segment will address Credit Scores
(and mistakes I see clients make. )
This particular one is a real life "just happened today" scenario.
I have clients that have been shopping since the summer and have not been able to find the home that fits their needs just yet. One just hit the market today that seems to be a good fit for them and they wanted to update their file and run numbers before they looked at the house... Since August they have sold and closed on the old home and have been renting, so it was time to update their credit. Their score dropped from 706 to 685 mostly because of a new account and playing with balances on credit cards. In October they took advantage of a 0% interest rate for a motorcycle for one of their sons and bounced some money back and forth through a few credit card. The new loan doesn't keep them from qualifying but that drop in credit score will cost them every month. The mortgage payment alone will increase by $49.25/month and the PMI an additional $11.67/month - so that interest free loan is actually costing them close to $61.00 per month. If that score dropped to 679 the difference would have been ugly on both the rate and PMI.
Always be careful what you do with your financial world - but especially be careful when shopping for a house.
'Tiz the season of retail and the too good to be true offers for credit cards etc... "apply now and get 20% off of the sweater you are about to buy" JUST SAY NO!
Other than the obvious paying your bills on time... here are some ground rules for keeping your credit scores climbing:
- Don't open any new accounts
- Don't Close any existing accounts
- Keep balances on credit cards under 20% of the limit
- Do Not carry a balance on credit cards
- Activity is good, balance is bad. After 6 months of inactivity your score can actually disappear. Use a card once a month for a small purchase you need anyway, let it go through the billing cycle and pay it in full when due.
- Maintain 3 active pieces of credit.
That is truly just the basics of credit and credit scores. Mostly common sense, but not all of it is common sense. When in doubt you should call your trusted, Licensed "mortgage guy" like myself before making a mistake that can cost you for years to come.
Call me for all your residential lending needs!
Robert Rauf
Mortgage Loan Originator NMLS# 248937
http://www.homebridge.com/RobertRauf
or my blog: http://activerain.com/blogs/rrauf
Office: (732)908-4868 Cell (732)740-0175
RRauf@HomeBridge.com
www.RobertRauf.com
Since 1987 I have been helping my clients fulfill their dream of home ownership! HomeBridge Financial Services, Formerly REMN, HomeBridge Financial Services is located at 9 Grand Ave, Building 2 Suite A Toms River, NJ 08753. NMLS #6521. New Jersey Licensed Lender and Mortgage Banker #L041053. Visit www.Homebridge.com or www.RobertRauf.com for more information. NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey, Toms River NJ 08753, Toms River NJ 08755, Brick NJ 08723, Brick NJ 08724 Mortgage in Ocean County NJ, Mortgage in Monmouth County NJ, Jackson NJ 08527, Howell NJ 07731, Lacey 08731 08734, Beachwood 08722 Bayville 08721,
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