Updates for Fannie Mae Conventional 97% Mortgage Loans

Fannie Mae Logo

FANNIE MAE CONVENTIONAL 97% MORTGAGE LOANS

A Conventional 97% mortgage loan is a Fannie Mae home loan that allows homeowners to purchase a home with only a 3% down payment. It is a great misconception that all conventional mortgage loans require a 20% down payment however many options for alternative financing do exist with low down payments or even no down payments.

The Conventional 97% Mortgage is Back!

The 3% down Conventional mortgage is now back through Fannie Mae’s My Community Mortgage® as well as for standard conventional loans. This program is designed for first time homebuyers that may not have the resources for a large down payment. At least one of the borrowers on the loan must be a first time home buyer in a purchase transaction. The  My Community Mortgage® program is only available for low to moderate income families and may require home buyer education prior to loan closings. The standard conventional mortgage is also designed for first time home buyers but does not have income restrictions.

97% refinance loans will also be made available for those who do not qualify for a HARP refinance but have loans owned by Fannie Mae (see Fannie Mae Loan Lookup tool to confirm eligibility). This high LTV refinance program will be available only as a limited cash-out option which allows a borrower to simply change their interest rate or mortgage term.

Update on the Conventional 97% Mortgage from Fannie Mae Announcement

Announced on December 8th, 2014 Fannie Mae will reinstate the 3% down mortgage program. Fannie Mae’ Executive Vice President Andrew Bon Salle explains,  “This option alone will not solve all the challenges around access to credit.  Our new 97 percent LTV offering is simply one way we are working to remove barriers for creditworthy borrowers to get a mortgage.  We are confident that these loans can be good business for lenders, safe and sound for Fannie Mae and an affordable, responsible option for qualified borrowers.”

Read: Fannie Mae’s Announcement on 97 Percent LTV Option for First-Time Homebuyers

Alternatives to Conventional 97% Mortgage Financing

If a borrower does not meet the eligibility requirements for a Conventional 97% Mortgage, homebuyers may need alternatives for low down payment home loans. One great options is the FHA mortgage program which still only requires a 3.5% down payment.

FHA Mortgages have been very popular over the past several years as they are more flexible on credit and qualifying after bankruptcies and foreclosures. FHA loans also may allow for family members or close friends to gift the down payment.

That’s right, a borrower can buy a home with none of their own money out of pocket which may be limited on 97% Conventional financing. Closing costs may also be paid by the seller with a limit of 6% of the home’s purchase price while Conventional loans limit seller paid closing costs (Seller concessions) at 3%.

Conventional 97 Mortgage Alternatives: USDA Rural Development Loan

Another low down payment mortgage alternative may be the USDA Rural Development Loan which is a no down payment mortgage with 100% financing. While the USDA option may be great to consider, there are downsides.  Currently many USDA field offices are caught up on loan application and are approving Rural Development loans very quickly however at times they do get several weeks behind before reviewing applications.

One major factor of this loan option is that the home must be in a rural area. The USDA guarantee this home loan type to help grow rural communities therefore the location of the home cannot be in a largely urban area (see the USDA’s eligibility website for more information).

USDA Rural Development Loan Benefits:

  • Zero Down Mortgage
  • Lower Mortgage Insurance Premiums (PMI)
  • Government Guaranteed Mortgage Loan
  • Easier to Qualify for than the Conventional 97 Mortgage
  • Lower Mortgage Interest Rates

Conventional 97 Mortgage Alternatives: Conventional 95 Mortgage Loans

Lastly, the Conventional 95% mortgage loan is another great alternative to the Conventional 97% mortgage loan. Not everyone will qualify for the 3% down payment mortgage including those that are not first time home buyers or make too much money for the My Community Mortgage®. With a couple of quick yard sales and postings on craigslist you may be able to come up with the extra cash for a 5% down payment which may offer better financing terms. While only 3% down sounds great, you will be much happier with the lower interest rates and Mortgage Insurance Premiums (PMI) that just a bit more cash will bring.

Conventional 95 Loan Benefits:

  • Low Down Payment Mortgage with only a 5% Down Payment Requirement
  • Lower Mortgage Insurance Premiums (PMI)
  • Government Guaranteed Mortgage Loan
  • Easier to Qualify than the Convention 97 Mortgage
  • Lower Mortgage Interest Rates
  • More Lenders participate in Conventional 95 Financing

Apply for Low Down Payment home loans like Conventional 97% Mortgage Financing

Riverbank Finance would be more than happy to help you review your low down payment home loan options. Apply now for a My Community Mortgage® for first time homebuyers and buy a home with only a 3% down. Call us today at 800-555-2098 or submit a request below for additional information.

Get Free Advice Now!

Your Name (required):

Your Email (required):

Phone:

Goal:

Your Message:

Quiz: 1+5=? 

New Loan Estimate Form and Closing Form for 2015

CFPB logo - New GFE Loan Estimate Changes for 2015November 20th the Consumer Financial Protection Bureau (CFPB) released a nearly 2,000 page document relating to RESPA disclosures and Real Estate Closings (If you have a month of free time click here to read). These forms are known as the “Know Before You Owe” mortgage disclosures. This final rule applies to all clients applying for and closing on residential mortgage loans.

The new rule mandates the use of a new three page “Loan Estimate” which replaces the Good Faith Estimate (GFE) and the Truth in Lending (TIL) Disclosure. There is also a new replacement for the HUD-1 Settlement Statement which is a five page document called the “Closing Disclosure“.

What is the new Loan Estimate form?

The new loan estimate form is a three page disclosure triggered when an application is made to a mortgage company. The Loan Estimate provides a summary of loan terms, loan costs, and other closing costs.

When does a client get the New Loan Estimate Form?

The mortgage company must provide the Loan Estimate within three business days of the client’s application. The new form must be given to the client at  least three business days before the loan closing (3 additional days if mailed) which is similar to the current regulations for mortgage disclosures.

Re-Disclosure of a revised Loan Estimate May Create Loan Closing Delays

In circumstances where the lender may need to provide a revised Loan Estimate, it cannot be provided on or after the date of the Closing Disclosure. The lender must provide the Loan Estimate at least three business days before closing of the loan (they may close on the fourth business day). Remember, this ONLY applies if a revised Loan Estimate needs to be provided.

What is the New Closing Disclosure Form for Real Estate Closings?

The new Closing Disclosure is a five page form that replaces the HUD-1 Settlement Statement and the final Truth in Lending Disclosure which provides a summary of the actual loan terms, loan costs, and all other closing costs.

New Closing Disclosure Waiting Period for a Real Estate Closing

The lender must provide the Closing Disclosure to the consumer at least three business days before the loan closing. If there are changes to the Closing Disclosure between when it is given to the client and the loan closing, another three business day wait period must be met before closing. Remember this rule is already in place for the Truth in Lending Disclosure so it is not a new wait period.

The numbers on the Closing Disclosure form must be as accurate as possible, however, the final Closing Disclosure must be updated with the actual numbers at close.

What changes would require Re-Disclosure of the Closing Disclosure Form?

There are three changes that would require a new Closing Disclosure be presented to the client.

  1. Changes to the loan’s APR greater than 1/8 percent (or ¼ percent for ARM loans),
  2. Changes to loan product (example FHA to conventional),
  3. The addition of a pre-payment penalty.

Does the Final Rule apply to All Mortgage Loans?

No. The final rule does not apply for home-equity loans, reverse mortgages, mobile home loans or creditors that make five or fewer mortgages per year. For additional information on the new forms and closing disclosures you are welcome to call a Riverbank Finance Loan officer at 800-555-2098 to review how it may affect your real estate closings.

Other Helpful Links

Compare Current GFE and HUD-1 Settlement Statement with the new Loan Estimate Disclosure and Loan Closing Disclosure (Before and After)

NOTE: Riverbank Finance LLC is not a government organization nor associated with or acting on the behalf of the a government entity. Information in the article should be used for illustration purposes only and not taken as legal advice. It is recommended that you speak with a competent attorney to review how the applicable laws will affect you.

VA Home Loans for Military Veterans | Free Appraisal

Veterans Day - Free Appraisal OfferAbout Veterans Day

As the United States continues fighting overseas, the population of military veterans continues to increase. According to the most recent Census information there are over 21 million veterans that have served our country. The growing population of veterans struggle to receive proper healthcare and are faced with repeated VA hospital related scandals and deficiencies. There are nearly 4 million veterans with service related disabilities that return to the United States and are in great need of a helping hand from those around them.

Please remember the meaning of Veterans Day and together, let’s honor those who have served our country.

VA Home Loan | Free Appraisal Offer

Here at Riverbank Finance, we take pride in offering zero down VA loans to our military veterans. As with most of our loan options, we offer VA loans with no lender fees and have zero cost loan options. From today through the end of November, the owners of Riverbank Finance will personally pay for the appraisal cost for new VA-eligible home buyers that receive financing through our company.

Disabled Veterans can Waive the VA Funding Fee

For military veterans with a disability rating of at least 10%, the Veterans Administration will waive the VA funding fee.  Additionally surviving spouses of veterans who died in service or from a service-connected disability are also eligible to have the VA funding fee waived.

Michigan Property Tax Exemption

Veterans that have served our country and have disability rating of 100% are eligible to have their Michigan property taxes waived for their primary residence located in the state of Michigan. We would love to help our disabled veterans complete the required paperwork to have their property taxes waived as part of our home buying process.

We look forward to helping you buy a home with no down payment using your VA benefits. Call a VA loan officer today at 1-800-555-2098 to start your home purchase application or request information below:

Get Free Advice Now!

Your Name (required):

Your Email (required):

Phone:

Goal:

Your Message:

Quiz: 1+5=? 

Disclaimer: Appraisal program available only to new clients that are approved for VA financing. Riverbank Finance LLC reserves the right to discontinue this program without notice. Not all will qualify. No purchase necessary. Call 1-800-555-2098 to request your VA certificate of eligibility through the Veterans Administration. 

FHA Construction Loans

Construction crew building a home using the Michigan FHA construction loan program.What is the FHA One time close construction loan program?

Conventional construction loans are typically difficult to qualify for and require very large down payments however the FHA has introduced a construction loan program for the average family. Qualifying is easy with flexible credit guidelines and low score requirements. The best part is that a family can build a home with as little as a 3.5% down payment.

Michigan FHA construction loans are one time close mortgage loans that do not require separate construction loans and end loans like a normal conventional construction loan. With a single mortgage a borrower can purchase the land, build the home and not have to worry about an end appraisal or refinance once the house is built. This Construction to Permanent loan program allows a borrower to avoid re-qualifying, reappraising and incurring additional loan closing costs.

Build your dream home with a low down payment with a FHA construction loan!

Benefits of the FHA Construction Loan

compare fha construction loan benefits

There are many benefits to FHA construction loans over other construction mortgage products. One major benefit is that a borrower does not have to pay mortgage payments during the construction. The first mortgage payment is typically 60 days after the certificate of occupancy is issued and the borrower can move into the home.

  • Borrower can use land equity as down payment
  • No payments during construction
  • One time close means half the closing costs
  • Low down payments required of only 3.5%
  • Programs available for low credit scores of 620+
  • Manufactured Homes and Modular homes are Eligible
  • Low Fixed Mortgages Rates
  • Locked in mortgage rate which reduces rate risk
  • Builder/retailer is allowed staged funding draws during construction
  • Closing costs and Fees may be paid by the Builder

Downsides to FHA Construction loans

While the FHA construction loan program is an amazing home loan option it does of course have some downsides. The largest downside is that the borrower will be required to pay up front mortgage insurance which is currently 1.75% of the loan amount. This gets added to the mortgage balance at the loan closing and is paid to the Federal Housing Administration to insure the mortgage. Additionally all FHA loans have monthly mortgage insurance which is similar to conventional loan PMI.

Loan Restrictions Include:

  • Must have a 620+ Credit Score
  • Borrower cannot perform construction
  • Maximum loan amount set by FHA loan limits
  • No Adjustable Rate mortgages available

Summary of the Construction to Permanent FHA Construction Home Loan

The FHA construction loan program opens up the door to home ownership for families in all walks of life. Building your own home may allow you to have the home of your dreams without settling for an existing home. Using the equity in your land or as little as a 3.5% down payment you may be able to build your next home. Our construction program allows for stick built home, modular homes and even manufactured homes.

For more information on a FHA Construction Loan call Riverbank Finance LLC at 1-800-555-2098 or send an inquiry below.

Get Free Advice Now!

Your Name (required):

Your Email (required):

Phone:

Goal:

Your Message:

Quiz: 1+5=? 

5 Reasons why Now is the Time for a Cashout Refinance Home Loan

cashout refinance home loan

A Cashout refinance home loan is a mortgage that pays off your current loan by refinancing and provides the homeowner with funds at closing to pay off debt, complete home repairs or simply as cash in hand. Recently mortgage rates fell to the lowest they have been in 16 months. This may make it the right time for you to do a Cashout refinance mortgage on your home. The following five reasons reason make it the perfect time to do a cashout refinance.

1)      Low Mortgage Rates make it a perfect time to do a Cashout Refinance Mortgage.

As noted above, mortgage rates have dropped significantly over the past year and a half.  At the start of 2014, average mortgage rates were between 4.50% and 4.75% for a 30 year fixed rate mortgage according to Freddie Mac’s Primary Mortgage Market Survey (U.S. Weekly Averages). As of October 16th, 2014 Average mortgage rates have now dropped to 3.97% for a 30 year fixed rate mortgage for a prime borrower. This drop in mortgage rates may allow a home owner to save thousands of dollars in mortgage interest over a 30 year home loan by refinancing. With low mortgage rates, a homeowner may be able to receive cash out from the equity in their home and keep their mortgage payment the same or even reduce their mortgage payments.

2) Home Values Have Generally Increased over the past few Years Creating Home equity to Cashout.

Following the mortgage meltdown, homeowners saw the values of their homes plummet dropping as much as 90% in areas like Detroit, MI. For families that had plans of doing home improvements or using the value they have accrued in their home’s equity for college tuition may have missed their opportunity until now. Over the past few years home values have steadily risen year over year is most areas. As home values continue to rebound or even skyrocket in areas like Grand Rapids, MI, now homeowners may finally have the equity to complete their financial goals for a cashout refinance.

Related: Use our home value estimator to research the value of your home and calculate your home’s equity.

3) Many Banks and Mortgage Companies have slowed down Allowing Home Loans to Close Quickly.

In many area in Michigan and the Mid West, home buyers complete their purchases mainly in the warm weather of Spring and Summer. As temperatures begin to drop, homebuyers put their relocation plans on hold until the next season. This cyclical effect of home buying allows banks and mortgage companies to catch up and close mortgage loans quickly in the fall and winter seasons. This may allow you to close your mortgage quickly in as little as 14 days with the right mortgage company.

4) There may be Tax Benefits of Consolidating Debt with a Cashout Refinance.

As you may know, credit cards typically have high interest rates and minimum payments. For some, if you can only afford to pay the minimum payments you may never pay off the credits card loans. An alternative to paying high interest credit cards would be a debt consolidation mortgage with a cashout refinance. You may be able to save thousands of dollars in interest and reduce your overall payments. An added benefit of consolidating debt with a cashout refinance is that mortgage interest is tax deductible whereas you cannot write off credit card interest or personal loans on your tax returns. Speak with your tax professional to see if you are able to benefit from a tax write off with a cashout home loan.

5) Mortgage Programs are expanding Making it Easier to Refinance your Mortgage and receive Cashout.

After the great recession caused by bad mortgage loans, banks and lenders tightened their underwriting guidelines making it very difficult to be approved for a home loan. In general, many banks required credit scores to be 640+ with no credit blemishes in recent years. Now that mortgage companies are becoming more familiar with recent laws and regulations, the industry is seeing expanded credit guidelines allowing homeowners to be approved more easily for mortgage loans. Home loans such as the FHA Mortgage allow homeowners to be approved with as little as a 560 credit score and only 2 years out of a Bankruptcy. With a FHA home loan a homeowner may be able to cashout up to 85% of their homes value to consolidate debt, do home improvements or even get cash back at the closing.

For more information on a Cashout Refinance Mortgage call Riverbank Finance LLC at 1-800-555-2098 or send an inquiry below. Our wide variety of cashout home loans in Michigan may allow you to get the cash you need.

Get Free Advice Now!

Your Name (required):

Your Email (required):

Phone:

Goal:

Your Message:

Quiz: 1+5=? 

Map of Average Mortgage Balances by State

In an article released by Business Insider analysts break down the average mortgage balances by state including the US average mortgage balance.  Using statistical information provided by one of the main three credit bureau reporting agencies, Experian’s Decision Analytics, analysts created a heat map demonstrating the hot zones for high mortgage debt.

Ranking in the top five for mortgage debts are Washington DC, Hawaii, California, Maryland and New Jersey all with over $200,000 in average mortgage debts. The US average mortgage balance was $157,154 with only 16 states holding higher average balances. Rounding up the bottom five states for low loan balances are Oklahoma, Arkansas, Indiana, Mississippi and West Virginia with average mortgage debts of $93,195.

See how you stack up against your neighbors with the heat map below:

Map of US average mortgage balance by state

 

Here is the list of average home loan balances by state:

Chart of average mortgage balance state table

 

For more information visit the Business Insider post written by ANDY KIERSZ and LIBBY KANE at: http://www.businessinsider.com/mortgage-balance-state-map-2014-10

Michigan Vacation Home Mortgage | Second Home Mortgage Loan

Michigan vacation home mortgage loanHistorically real estate has been one of the best investments you can put your money in with year over year positive appreciation and tax advantages.  You may already have a place you call home but adding on an investment property may make financial sense.  At Riverbank Finance, we offer second home loans and a vacation home mortgage with low down payments.

Benefits of a Vacantion Home Mortgage

  • Low Down Payments
  • Low interest rates
  • Own appreciating real estate
  • Enjoy tax advantages
  • Save Money on expensive Vacation Trips

Why Michigan is Hot Spot for Buying a Vacation Home

If you are a resident of Michigan or if you have traveled to Michigan you are aware of the unique beauty it has to offer. Michigan has been touting its beauty nationally through its Pure Michigan marketing campaigns. Vacation towns such as Traverse City, Saugatuck and Mackinaw Island have been displayed in TV commercials narrated by Michigan’s own Tim Allen. With its white sand beaches and beautiful Great Lakes, vacationers have traveled across the country to vacation here.

If you already own a home in a Michigan city such as Grand Rapids, Lansing or Detroit, taking a short trip to the lake short to visit your own vacation is a perfect weekend get-away. Ask a Riverbank Finance loan officer how you can buy a vacation home with a low down payment mortgage and a low fixed rate.

How to get a Vacation Home Mortgage in Michigan

If you have been considering buying a vacation home in Michigan the process may be easier than you think.  Even if you already have a primary residence you may be eligible for a second home mortgage loan through Riverbank Finance. We offer some of the lowest rates and down payment options in the industry.

Second Home Mortgage Loan Requirements:

  • 10% minimum down payment
  • 620+ Credit Score
  • 45% or less Debt-to-Income Ratio
  • No Recent Bankruptcies or Foreclosures
  • Verifiable Income

To get more information on Michigan Vacation home loans, call a loan officer today at 800-555-2098 or request information below.

Get Free Advice Now!

Your Name (required):

Your Email (required):

Phone:

Goal:

Your Message:

Quiz: 1+5=? 

Calculating MI Property Taxes

Calculating Michigan Property TaxesWhen shopping around for a home it is beneficial to check the cost of property taxes.

Property Tax Overview:

Property tax is a levy on property.  It is required to be paid by the owner annually based on the fiscal year. They are collected on a county level and each county has its own system in determining them.

Because each county has its own system, property taxes vary from county to county.  Property tax on homes are based on a tax assessments and millage rates for the local municipality. Counties take many variables into consideration as well: funding needs, property value based in appraisal, school district, transportation, etc.

Because there are a variety of variables considered during the process property taxes are not set, they fluctuate.  Local governments can raise property taxes for a number of reason (this is often seen when the economy starts to take a turn for the worst). Property taxes are set by millage rates that are typically voted on in local elections to cover such things as fire departments, libraries and police departments.

Related: Michigan Property Transfer Tax Estimator

How to calculate Michigan Property Taxes

Calculating Michigan property taxes is an important step when you are buying a new home. If your estimates are off, you could find your budget thousands of dollars off each year.  The easiest way to do the math is to use the Michigan Property Tax Estimator.

You will then complete the following steps:

  1. Enter the SEV (State Equalized Value) found on the property tax records (you will use the SEV to calculate the property taxes for a property that you are purchasing. To calculate the property taxes for the current owner you will use the “Taxable Value” which may be less than the SEV.
  2. Select your Michigan County
  3. Select Your City/Village/Township
  4. Select Your School District

After entering this information you will see two numbers below. One number will be the estimated property tax bill based on a Primary Residence and the other number will be the number based on a non homestead exempt property such as an investment property.

How you affect your property taxes:

Homeowner’s actions often increase their property taxes.  As a home’s value increases so do its property taxes.  For example, if homeowners remodel, re-roof, add a pool or do anything else that would add value to their home, their property taxes may be effected. The local municipal assessor will revisit the property and make value adjustments accordingly.

Michigan Property Tax:

In Michigan, the median home value is $132,200 according to Tax-Rates.org.  Counties collect an average of 1.62 percent of their property’s market value as property taxes; that’s an average of $2,145 each year spent on property taxes – equivalent to 3.8% of most Michigander’s annual income ($55,244)!

Now, as stated above, these statistics are averages of Michigan as a whole.  They do vary, a significant amount! The highest property tax in Michigan is that of Washtenaw County which is at 2.9 percent.  The lowest is in Luce County at .56 percent.

As you can see, location matters for many reasons when choosing a home.

So, when you are shopping around take all expenses into consideration so you are able to make the best and most affordable decision for you and your family.

Am I eligible for a USDA Rural Development Mortgage?

USDA Rural Development Home Loans

A USDA Rural Development Mortgage is a no down payment mortgage that is offered to rural property purchasers.  There are many benefits of this mortgage including no down payment needed, a minimum 580 credit score and low interest rates! This home loan options is growing in popularity among first time home buyers and repeat home buyers that are looking to upgrade to a new home.

For more information on rates and benefits visit USDA Rural Housing Mortgage.

So the question arises:

Is the home I want to purchase eligible for the USDA Rural Development Mortgage?

Eligibility for this loan is based on income and the population of the location based on the 2000 Census data.  The intention of this mortgage is to lend to purchasers within rural communities.  Areas that are highly populated are not eligible for this mortgage. Alternatives for properties that do no qualify for the Rural Development loan would be FHA loans or Conventional loans.

*Note: The National USDA will be updating the USDA Rural Development program eligibility maps.  On October 1st, 2014 the 2010 Census data will be used to determine eligibility, rather than the 2000 Census data.  For more information go to 2014 Rural Development Loan Eligibility Updates.

To tell if your income and selected area are eligible for this loan go to USDA Rural Development and follow this step-by-step process to determine if you are eligible based on population and income:

Step-By-Step Process to Determine Eligibility:

USDA Property Eligibility

From the Eligibility panel on the right hand side of the USDA Rural Development page select the Property Eligibility Program that fits your situation followed by the Accept button for the Property Eligibility Disclaimer.  From there you will need to enter your address into the search box in the top left hand corner of the map.  Once this is done you will be immediately notified if your area is eligible or ineligible for this mortgage.

USDA Income Eligibility

From the Eligibility panel on the right hand side of the page select the Income Eligibility Programs for a Single Family Household.  From there, use the drop box and select your state; do the same for your country.  You will then be asked to fill out the “Housing Members Information.”  Once this is filled out click the next button.  Fill out the “Expenses and Deductions” and “Gross Monthly Income” and select finish.  The following page will inform you if you are eligible or ineligible based on the information you have provided.

*Note: Home purchasers that are eligible based on the USDA still need to go through the actual application process in order to be accepted for this mortgage.

To apply for a USDA Rural Development Mortgage contact a licensed loan officers at 800-555-2098 or request information below:

Get Free Advice Now!

Your Name (required):

Your Email (required):

Phone:

Goal:

Your Message:

Quiz: 1+5=? 

 

Control Your Credit so it Doesn’t Control You!

credit-meterAll throughout school we are graded.  After graduation we tend to have the mindset “YES! I passed! No more teachers, no more grades!”

However, that is not the case – not at all.

From childhood into the first few years of our adult lives we receive report cards stating how well we did on an academic grading scale.  After that, we are graded based on our financial habits: our credit.

So, what is credit?

In its simplest form credit is trust.

If you don’t have good credit, you don’t trust.  If you don’t have trust, you won’t have anything.

Credit gives us the ability to acquire goods and services before making an actual payment or before paying off a balance in full; we are able to borrow money or purchase items on credit.  This system is all done based on an agreement, based on trust, that the balance due will be paid back in a timely fashion.

Your credit could be the deciding factor on weather you are able to become a homeowner or not.

Related: Low Credit FHA loans

Trust must be gained

Likewise, credit must be gained, it is not given.  It is something you must work towards and earn.

Similar to employers needing to see your resume prior to determining if you are right for a position, lenders must look at your credit report to see if you are eligible to receive their trust – that is, to see if they allow you to take out a line of credit: a credit card, a loan, a mortgage, etc.

What is a Credit Report?

A credit report is a financial report card. 

A variety of financial information is taken into account and provided in a credit report: bill payment history, loan repayment history, amount of credit, amount of debt, public records, account types (bank accounts, student loans, mortgages, etc.), bankruptcies, etc.

The information provided on your credit report is used to calculate your credit score. 

What is a Credit Score?

In comparison to the academic grading system, your GPA (grade point average) is equivalent to your credit score (AKA FICO score).

Your grades are used to calculate your GPA; your credit score is calculated by the information in your credit report.

Credit scores are represented by numbers: 300 to 850:

  • Excellent: 720 to 850
  • Good: 680 to 719
  • Average: 620 to 719
  • Poor Credit: 580 to 619
  • Bad Credit: 500 to 579
  • Miserable Credit: 300 to 500

The higher your credit score is the better off you are.  Your score affects whether you are eligible to borrow money, the amount you are eligible to borrow, the interest rates of the loan and the terms you have to abide by.

An excellent credit score of a 720 or higher means that you are a low risk borrower.  In other words, a lender trusts that if they lend to you, you will make all of your payments on time throughout the life of the loan; they trust you.

On the opposite side of the spectrum, if you have a miserable credit score lenders categorize you as a high risk borrower.  That is, they are much less likely to lend to you because they will not trust you enough to pay them back.

If you don’t have the best credit you may still be eligible to buy a home with bad credit by working with the loan officers at Riverbank Finance LLC.   

In sum, the higher your credit score is the more opportunities you will have.

Credit Bureaus

Credit bureaus, or credit reporting agencies, gather your credit information and provide your credit reports.

There are three Credit Bureaus or Credit Reporting Agencies: Equifax, Experian and TransUnion.

It is important to know that not all of your information is reported to each of these bureaus.  One may receive your credit card information, while the other two will not.  Another bureau may receive your mortgage information and not the others, and so on and so forth.  Therefore, each bureau may provide you with a credit report that varies from the other two.

You are entitled to a free annual credit report from each of these bureaus.  You are able to request your credit report(s) at www.annualcreditreport.com (or call 1-877-322-8228).

Riverbank Finance also offer an instant credit report online that you can request for a home purchase.

Better yourself, better your credit!

If you would like your credit score to be higher than what it is you may want to make some lifestyle changes.

Some key pints to live by:

  • Pay your bills, and pay them on time!
  • If you do miss a payment pay it ASAP! Try your hardest to stay current on your bills.
  • Pay off your debt, don’t add onto it.
  • Keep your credit balances low.  Maxing out your credit cards month after month make it seem like you are irresponsible.
  • Do not open unneeded credit accounts.  According to Credit Karma having four to six credit cards open is a healthy if you manage them currently – it will make your look responsible!
  • Check your credit report and make corrections when needed.
  • Do not be afraid to get help! If you are concerned or unsure of what to do when it comes to your credit ask a professional.

Remember, your credit can change your life for the good or for the bad.  Control your credit so it doesn’t control you and our life!