Jill Finkelstein - Compass



Posted by Jill Finkelstein on 7/20/2020

Photo by bongkarn thanyakij from Pexels

Shopping for a new home should be an exciting experience, but if you are unsure of where you stand with your credit, it can be a little nerve-wracking. Having good credit will not only help you to secure more favorable interest rates for your mortgage, but it can also help you to avoid less favorable loan structures, higher down payments, and additional costs such as PMI. The best way to prepare yourself for your financing is to whip your credit into shape before your hunt begins. Check out three ways to help prep your credit.

Check for Any Collections

Collections are delinquent accounts that can seriously affect your credit score. Review your credit report and address any collections that are listed. If there are ones on there in error, file a dispute with the credit bureaus. If you owe the debt and can pay it, contact the collection company and ask if you can satisfy the debt by paying it and have it removed from the report. Finally, if you can not afford to pay the whole debt, discuss with the creditor possible settlement options.

Don't Request Any New Credit

When you open a new credit card or credit account, it can affect your credit in multiple ways. First, it will count as a hard inquiry, which can slightly lower your score, and secondly, it may change the average of your credit history. Mortgage companies don't like to see a lot of credit being acquired right before a mortgage is being established, so if it can wait, let it wait until the mortgage is secured. 

Pay Down Your Credit Card Balances

If you have the means to reduce the balance of your credit cards, now is the ideal time. Your credit score is affected by your credit card balances in two primary ways. The first being the amount of debt that is listed on all of your credit cards. The second is the ratio of the amount owed on your card in relation to the credit limit on the card. A good ratio is less than 30%, so to keep your credit score high, you will want to be below this percentage. Paying a large chunk of your debt can increase your score by several points, and also improve your debt to income ratio. Just be sure to do this at least thirty days out so that the new balance is reflected when your score is pulled.

Don't let poor credit lower your chances of buying the home that you always wanted. Follow the tips above to pump up your credit before applying for your next mortgage. Even a few points can mean significant savings. 




Tags: Mortgage   Loan   debt  
Categories: Uncategorized  


Posted by Jill Finkelstein on 6/14/2020

Image by Tierra Mallorca from Unsplash

One of the most important things to check once you decide to start the home-buying process is your credit score. The three major credit bureaus keep track of how you pay for your credit and how much credit you have. Your score fluctuates, sometimes daily, depending on how much you owe and how many accounts you have. Applying for credit also affects your score. It will usually drop by 2 points every time you apply for a loan or credit card, even if you don’t get the credit.

Applying for a Mortgage

When you apply for a mortgage, the lender pulls your credit score from all three credit bureaus. The lender will advise you whether it has a loan program that will accept your credit score. Some loan programs work with those who have scores as low as 520. Because the credit bureaus deduct points every time you apply, it’s better to call lenders and ask them if they have programs for lower credit scores—if your score is low.

Credit Scores and Interest Rates

Because lenders interpret your credit scores as the inability to manage your credit, they deem the risk of loaning you money quite high. The higher the risk, the higher your interest rate will be. If you have a credit score of 750, you might get a lower interest rate, depending on the current going rate. However, for the same loan, if you have a credit score of 540, you will pay quite a bit more interest. While rates depend on the bank, an example would be that you could pay 9 percent instead of 4 percent if the going rates are at 4 percent.

Changing Your Credit Situation

Before you even start looking for a house, pull your credit from all three major credit bureaus. Look for incorrect data. Dispute the data to correct it. For example, if you see a 90-day late on a credit card that you did not apply for or use, dispute that card to take it off your credit report. It is always a good idea if you pull your credit at least every three months to check for identity theft and incorrect data.

If your credit score is low because you ran into hard times and everything is correct, you could buy down your interest rate and put a larger down payment down on the loan. While you are saving up for the down payment, make sure you pay your bills on time to better your credit score. Try to save up 25 or 30 percent instead of the 20 percent most lenders require. Saving up a few thousand extra dollars also allows you to buy points, which drops your interest rate. A higher down payment also decreases the lender’s risk and might get you a lower interest rate.

The cost of points is usually 1 percent of the total loan. Thus, 1 point on a $100,000 mortgage would cost you $1,000. It could buy you a quarter of a percent interest rate. Instead of an 8 percent interest rate, you would have a 7.75 percent interest rate.

Researching loan programs and making sure your credit is accurate helps you determine whether you want to start the house-hunting process now or save for a higher down payment and wait for your credit score to increase.




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Posted by Jill Finkelstein on 4/19/2020

FHA loans have long been a valuable resource for Americans who want to fulfill their goal of homeownership but who don’t have the benefit of a lengthy credit history and equity.

If you’re hoping to buy a home in the near future but want to explore all of your options in terms of financing, this article is for you.

Today we’re going to talk about FHA loans and how to know if you qualify for one.

What are FHA loans?

FHA loans are issued by private mortgage lenders across the country, just like regular mortgages. The difference, however, is that an FHA loan is “guaranteed” by the federal government.

Lenders decide your borrowing eligibility, and how much you can borrow, by determining risk. If you don’t have a sizable down payment (oftentimes 20% or more) and you have a low credit score, most mortgage lenders will see you as a risky person to lend to.

When you get an FHA loan, however, the federal government assumes some of that risk, allowing you to secure the loan anyway.

This means you can buy a home with a low credit score, a smaller than usual down payment, and save on some closing costs.

How do I qualify for an FHA Loan?

To find out if you qualify for an FHA loan, you’ll head to the same place as a traditional mortgage--a mortgage lender. Oftentimes, you can simply call or visit the website of lenders to get the process started.

As with all things, it’s a good idea to shop around for a mortgage lender. Their offerings will be largely similar, but there might be minor differences that make one better than another for your particular circumstances.

Down payment requirements

To secure an FHA loan, you will need to make a down payment of at least 3.5%. However, this low down payment comes with a price. You’ll typically be required to pay private mortgage insurance (PMI) fees on top of your accruing interest for your loan.

Credit score requirements

While you can often secure a mortgage with a lower credit score through an FHA loan, there are still some requirements. To secure a loan with the lowest possible down payment (3.5%), you’ll need a credit score of 580 or above.

Previous homeowners and FHA loans

A common misconception about FHA loans is that they are only for first-time homeowners. However, you can still qualify for an FHA loan if you’ve owned a home before as long as it has been three years since you’ve had a foreclosure or two years since filing for bankruptcy.

If you meet these three conditions, you should be able to secure an FHA loan through a traditional mortgage lender.




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Posted by Jill Finkelstein on 2/9/2020

There are a number of programs, government-sponsored and otherwise, that are designed to help aspiring homeowners find and get approved for a mortgage that works for them.

Among these are first-time homeowner loans insured by the Housing and Urban Development Department, mortgages and loans insured by the USDA designed to help people living in urban and rural areas, and VA loans, sponsored by the U.S. Department of Veterans Affairs.


In today’s post, I’m going to give you a basic rundown of VA loans, who is eligible for them, and how to apply for one. That way you’ll feel confident knowing you’re getting the best possible deal on your home mortgage.


What is a VA Loan?

VA loans can provide soon-to-be homeowners who have served their country with low-interest rates and no private mortgage insurance (PMI).

If you’re hoping to buy a home soon and don’t have at least a 20% down payment, you typically have to take out private mortgage insurance. This means paying an extra insurance bill on top of your monthly mortgage payments. The downside of PMI is that it never turns into equity that you can then use when you decide to move again or sell your home.

Loans that are guaranteed by the VA don’t require PMI because the bank knows your loan is a safer investment than if it wasn’t guaranteed

VA loans may also help you secure a lower interest rate, or give you some negotiating power when it comes to discussing your interest rate.

Finally, VA loans set limits on the number of closing costs you can pay in your mortgage. And, if you’ve ever bought a home before, you’ll know how quickly closing costs can add up.

Who is eligible?

There are some common misconceptions about who can apply for a VA loan? So, we’ll cover all the bases of eligibility.

If you meet one of the following criteria, you may be eligible for a VA loan:


  • You’ve served 90 consecutive days during wartime

  • You’ve served 181 days during peacetime

  • You’ve served six or more years in the Reserves or National Guard

  • Your spouse died due to their work in the military

There are some restrictions to these eligibilities. For example, your chosen lender may still have credit score minimums.

Applying for a VA Loan

There are two main steps for applying for a VA Loan. First, you’ll have to ensure your eligibility. You can do this by checking the VA’s official website. Be sure to call them with any questions you may have.

Next, you’ll need a certificate of eligibility. The easiest way to acquire one is through your chosen lender.  If you haven’t chosen a lender, you can also apply online through the eBenefits portal, or by mailing in a paper application.

Once you have a certificate, you can apply for your mortgage and you’ll be on your way to buying a home.





Posted by Jill Finkelstein on 12/8/2019

Image by Jojje from Shutterstock

Many people own homes through a mortgage agreement. Traditional mortgages are primarily fully amortized or gradually paid off with regular payments over the lifetime of the loan. Each payment contributes to both the principal and the interest.

A balloon mortgage is a short-term home loan with fixed-rate monthly payments that only take care of accrued interest on the loan for a set period. It also has a large “balloon” payment to cover the rest of the principal.

The payment plan is based mainly on a fifteen- or thirty-year mortgage, with small monthly payments until the due date for the balloon payment. These low regular payments partly cover the loan but require paying the remainder of the unpaid principal as a lump sum. Selling the house or refinancing the balloon loan before the payment is due is how most buyers approach this situation.

Key Issues with Balloon Mortgages

Lenders present a deadline by which the balloon payment is due (three- to seven-year period). The enormous amount is often more than borrowers can easily handle at once.

Paying only interest on a loan does not allow equity to build. Many homeowners use equity as a means to complete home improvements or other projects. Building equity also helps homeowners when it comes time to sell their home because a traditional mortgage reduces over time. 

Why People Opt for Balloon Loans

It is possible to refinance a balloon mortgage or sell the property before the balloon payment is due but it can be difficult to do so. A dry housing market, job loss, or low credit score are potential obstacles. Lay-offs and depressed home values can trap buyers in their balloon loans. Without the option to sell, refinance, or fulfill their balloon payments, borrowers may end up in foreclosure.

The One True Strategy

Traditional loans are generally safer than balloon mortgages. To keep housing costs at a minimum, use a balloon mortgage if you are sure you can exit before the balloon payment comes due. Otherwise, it is best to remain in the realm of traditional loans.

Review the pros and cons of taking a balloon loan before committing to it. Speak to your financial planner or realtor for professional guidance.




Tags: Mortgage   homebuyers   Financing  
Categories: Uncategorized  




Jill Finkelstein