Mortgage News Roundup
September 11th, 2014
Welcome to another Thursday. Today we’re going to look at some updates to the way FICO scores are evaluated, and four of the most expensive mortgage mistakes you can make.
Credit Score Reforms Could Put Better Credit Cards in Your Wallet
Aug. 9 saw the unveiling of FICO Score 9, the latest version of the nation’s most widely used credit scoring system. These three key changes could boost the scores of large numbers of consumers:
- If the only major black mark on your credit report is a result of medical debt, its impact should be reduced. FICO estimates that, on average, those in that position could see their score rise by 25 points on its 300-850 scale.
- Debts that have been in collection and then fully paid should no longer count against consumers’ scores.
- Those who have short or limited credit histories can expect “a more refined treatment,” in FICO’s words. This might see people in that position being approved for more credit at lower interest rates.
It’s not known exactly how or when these updates will be rolled out, so be patient, and keep paying your bills on time. If you can’t pay off your credit cards every month, then make sure you pay more then the minimum as that will make you appear more credit worthy.
The most expensive mortgage mistakes you can make
We all make financial missteps, whether it’s an impulse purchase in the checkout aisle or something less defensible, like an extended warranty or rental car insurance. But when it comes to a mortgage, your little mistakes get pretty big, like the one missed car payment.
So here’s some things that will cost you quite a bit if you’re trying to get a mortgage.
- Not mastering your credit. Pay your bills on time, don’t take on more than you can afford, and protect your credit.
- Not understanding your options. There are scores of state and local homebuying assistance programs out there. Buyers who don’t get a full picture of their mortgage options could be costing themselves a lot of money for a long time. Work with a professional loan officer to help you understand what’s best for your situation.
- Skipping a home inspection.
- Buying too much house. No one expects to lose a job, go through a divorce or face a medical problem, but it’s good to have a buffer.
Getting a mortgage may seem difficult at first. If you’ve got good partners with your loan officer and your real estate agent, and you’re prepared with documentation and a pre-qualified loan, you should get through fairly easily.