Many of the questions we are commonly asked in today’s real estate and mortgage environment are regarding credit scores.

When you talk with an experienced Loan Officer, be sure to ask them for recommended resources to help you improve your chances of affording the home you want.

How Your Credit Score Affects Your Ability to Buy The Home You Want:

Many people are not quite sure how their credit scores affect their ability to buy the home they want. In the simplest terms, the better your credit score, the better chance you have of qualifying for the mortgage loan that is ideal for you. This could mean better interest rates, more loan options, and a quicker closing.

Your credit score is also referred to as your “FICO score”. FICO is an abbreviation for the “Fair Issac Company, the developer of the original scoring model. The credit score that FICO gives you in a number between 300-850, with a higher number being a better score. The score is based on many factors, such as past late payments, debt utilization, and the age of your active accounts. However, how the final score is exactly calculated has not been released, as it is a trade secret closed protected by Fair Issac Co.

It is very important that you know and understand your credit score before you start evaluating mortgage loan options for the home you want to buy.

Two Ways to Get Your Credit Scores:

1. Go to www.myfico.com and sign up to obtain your credit score directly from FICO. Be careful that even though you can obtain your score for free you must then cancel your free trial within 10 days to avoid being charged for 3 months of service.

2. Use www.creditkarma.com. CreditKarma is a truly free way to obtain, and monitor, your credit score over time. CreditKarma is supported by advertising partners that advertise credit cards, loan programs, and more so that you can use the website free of charge. Credit Karma also offers you advice on how to improve your credit score by analyzing the different factors that make up you total score (length of credit history, hard credit INQUIRES, late payments, etc.)

You can also get your credit report free, once per year, but with no scores, from the government sponsored website www.AnnualCreditReport.com.

It is important to note that while your credit score is a key component, it is not the only factor that a lender considers when approving a mortgage for the home you have found.

Be sure to contact us by calling 508.528.1800 before you start searching for a home so you already know how to improve your chances of qualifying for the loan that is ideal for the home you want.

It’s the time of year when many people start planning to file their taxes.

As you start to get your paperwork organized, remember to double check the tax tips below from www.MortgageLoan.com.

2012 Mortgage Tax Planning Tips:

Paperwork to look for from your lender:

1. Whether you’ve done a mortgage refinance, or taken a second mortgage, your lender should send you a Form 1098 annually, which includes the amount of mortgage interest that you paid during the year. In most cases, that amount is tax-deductible.

2. You should also receive an annual escrow statement, indicating how much of your mortgage payments were used to cover expenses like homeowner’s insurance and real estate taxes. Interest and taxes paid through your mortgage can add up to substantial tax savings.

More Deductions:

1. If you have a second mortgage on your property, such as a home equity loan or a home equity line of credit (HELOC), much of the interest paid on those loans can be deductible. Every dollar used to finance home improvement projects up to $100,000 may reduce your taxable income dollar for dollar.

2. If you purchased a home in 2011, any points paid by your seller and lender may likely be deductible for that calendar year.  If you paid points on your refinance then you may be able to take the points as a tax deduction but will have to write those off for the term of the mortgage. 

You’ll need to divide your point deductions by the length of your mortgage term in years. For example, a borrower with a 20-year mortgage loan gets to deduct 1/20 of the paid points every year, until the loan is paid off or refinanced.

Refinancing Tax Breaks:

1. Refinancing a loan with prepaid points presents a tax break that many homeowners don’t know about. When you refinance mortgage, you may deduct the entire balance of the remaining points, and start counting years anew based on the points included in your refinanced loan. If you refinance a 30-year mortgage after four years, that’s 26 years’ worth of points deductions you can take all at once.

Also, if you have refinanced again due to the historically low rates, there may be an opportunity for you to “catch-up” on the deduction you made on first refinance.

Of course, when considering any of these strategies you’ll want to consult with your tax professional. If in the event you don’t have a tax professional to rely on, please contact me for a recommendation.

If you’re a real estate professional looking for free help with marketing, the opportunity to earn more leads and referrals, sign up for our REALTOR© Portal to get started today!

Many homeowners have heard about a government program called “HARP 2.0″, but most do not yet realize how it may be able to help them.

HARP = Home Affordable Refinance Program.  Discover some of the frequently asked questions about this program below.

What is HARP 2.0?

According to www.makinghomeaffordable.gov, the official website of HARP:

“If you’re not behind on your mortgage payments but have been unable to get traditional refinancing because the value of your home has declined, you may be eligible to refinance through MHA’s Home Affordable Refinance Program (HARP).”

The program is intended to help borrowers who owe significantly more on their home than what it’s currently worth.

Who is eligible for the HARP program?

• You have a mortgage owned or guaranteed by Fannie Mae or Freddie Mac.
• You do not have an FHA, VA or USDA loan.
• You are current on your mortgage payments and have not been more than 30 days late making a payment over the last year.
• Have a first mortgage not exceeding 125 percent of the current market value of your home.
• The refinance will improve the long-term affordability or stability of your mortgage.
• You have the ability to make the new payments
• Effective March 2009 – June 30, 2012.

How do I know if Fannie Mae or Freddie Mac has my mortgage?

Fannie Mae and Freddie Mac have “lookup” forms on their respective websites. Check Fannie Mae’s first because Fannie Mae’s market share is larger. If no match is found, then check Freddie Mac. Your loan must appear on one of these two sites to be eligible for HARP, and should appear on one of these two lookups.

Am I eligible for the Home Affordable Refinance Program if I’m behind on my mortgage?

No. You must be current on your mortgage to refinance via HARP.

Do I have to HARP refinance with my current mortgage lender?

No, you can do a HARP refinance with any participating mortgage lender.

What are some of the other benefits or pitfalls to refinancing with the HARP program?

Because there are many more nuances to the HARP 2.0 program, we encourage you to give us a call at (508) 528-1800 or contact us using the form on this website. We’d be happy to talk you through all your options!

Many people are not sure what “housing affordability” means, or how it affects their mortgage, housing payments or home values.

Let’s start with some of the latest stats on Housing Affordability:

• The monthly mortgage payment for a median-priced single-family home is now $700, compared to $1,140 in 2006 — a decline of nearly 40 percent!
• Mortgage payments now account for only 13 percent of monthly median family income, the lowest percentage on record (since 1971).
• Price declines and low mortgage rates have resulted in a ratio of monthly mortgage payments to median family income that is the lowest on record.

If you are a potential seller, one consequence of this record affordability is that you may be able to sell your home to a home buyer who would not have ordinarily been able to afford your home a few years ago. While the overall housing market is still struggling, the increase in housing affordability is seen as a bright spot for people now looking to sell or buy a new home.

If you need a mortgage in this climate, do not be deterred by various media reporting that you need a 20% down payment to qualify.

You don’t always need 20% down to qualify for a mortgage:

Many people do not realize that funding sources exist from the FHA, RD, VA and VHFA that still allow for low, or even no, down-payments. In addition, if you have good to excellent credit, you can also get ‘conventional’ mortgages with as little as 5% down by utilizing Private Mortgage Insurance (PMI).

If you would like to take advantage of the record housing affordability, and would like to know what your payments would look like, give me a call today at (508) 528-1800.