17
Aug
By First Rate Financial Group
Mortgage

Mortgage Shopping And Your Credit Score

Mortgage Shopping And Your Credit ScoreThe vast majority of people have to take out a home loan to purchase a house. This means applying for a mortgage. Unfortunately, shopping for a mortgage can actually hurt your credit score. Any potential lender will probably have to do a hard pull on your credit. This could temporarily reduce your credit score by a few points. Those few points could make the difference between qualifying for a mortgage and getting denied one. Fortunately, there are ways for you to shop for a mortgage without hurting your credit.

Check Your Credit Score First

First, you need to check your credit report before you start shopping for a mortgage. By law, the major credit bureaus are required to give you at least one free credit report every year. This is your opportunity to take a look at your credit report and correct any inaccuracies that might be present. That way, you can correct these issues before you apply for a mortgage instead of after. This can save you a significant amount of time during the shopping process. 

Get Pre-Qualified For A Home Loan

You should also get pre-qualified for a home loan before you start shopping in earnest. When you get pre-qualified for a mortgage, you receive an estimate of how much money you can borrow to purchase your home. This means that the lender will run a soft inquiry on your credit report, which will not impact your credit score. Pre-qualification is not as strenuous as the full approval process, and you will eventually have to go through the full application process to get your mortgage; however, getting pre-qualified is a great starting point.

Submit All Applications Rapidly When You Find The Right Home

After you apply for your first mortgage, you will have 45 days to talk to other lenders. As long as all of your other hard credit pulls take place within about six weeks, subsequent applications should not have an impact on your credit score. This means that you need to have all of your documents together, which will allow you to expedite the process. That way, you can find the best deal you can on a mortgage without unnecessarily impacting your credit score. 

16
Aug
By First Rate Financial Group
Mortgage

What To Know About a 40-Year Mortgage

What To Know About a 40-Year MortgageIf you take a look at your mortgage options, you might find an option for a 40-year mortgage. Now, most lenders do not offer this as an option, but if you find yourself struggling to keep up with your mortgage payments, the lender may offer to restructure your loan into a 40-year term. Is this a smart move, and what do you need to know about this choice?

Your Monthly Payments Get Smaller

One of the top benefits of restructuring your loan to a 40-year term is that you shrink your monthly payments. By spreading out the loan over 40 years instead of 30 or 15, you don’t need to pay as much money every month. If you are struggling to keep up with your payments, you can make them smaller without falling behind by going with a 40-year mortgage.

You Free Up Cash

Another benefit of a 40-year mortgage is that you can free up some cash. This is cash that you can use to pay off other debts, save for retirement, or invest in other areas. Because you won’t owe as much money every month, you will have more money to play with, which can ease your financial burdens.

You Pay More Interest And Slow Your Equity Buildup

On the other hand, you need to think about the downsides of a 40-year mortgage as well. If you increase your payments to 40 years, you will pay more money in interest overall. In addition, you will slow the rate at which you build equity, which means that you might not walk away with as much cash when you sell the house. You need to balance these risks with the benefits of a 40-year loan.

Think Carefully About Your Loan Options

In the end, a 40-year mortgage is not always a smart move, but if the alternative is foreclosure, it is something to consider. While this type of mortgage can help you reduce your monthly payments, it could also increase the total interest you pay while slowing the rate at which you build equity. You should talk to a professional to ensure you consider all of your options before you decide if this is the right move for you.

12
Aug
By First Rate Financial Group
Mortgage

The Top Reasons To Downsize When You Retire

The Top Reasons To Downsize When You RetireIf you plan on retiring in the near future, you might be thinking about moving. The kids might be grown, and you might not want to take care of such a large house. If that is the case, you should consider downsizing. When you downsize your home, you trade in your larger home for a smaller one. What are some of the top reasons why you should do so?

1. Bulk Up Your Retirement Account

The first reason why you should downsize is that you will free up more resources you can contribute to your retirement accounts. If you have been in your house for a long time, there is a great chance that you have paid off almost the entirety of your mortgage. Furthermore, your home may have even gone up in value by tens of thousands of dollars. Therefore, when you sell your house, you should receive most of the proceeds from the sale. You can use the proceeds from that sale to buy another house with cash and still have money left over to add to your retirement account. 

2. Reduce Your Overhead Expenses

You can also reduce your overhead expenses if you downsize your home. Your home insurance and property taxes should go down if you purchase a smaller house. You will probably have to spend less money on utilities, routine maintenance, repairs, and upkeep if you trade in your larger house for a smaller one.

3. Find The Right Location

If you decide to downsize your house, you will also have more flexibility regarding where to live. It is easier to fit a smaller house in an ideal location than a larger one. If you are willing to purchase a smaller house, you should have more options available to you, and you can find the perfect location for your retirement.

Consider Downsizing In Retirement

If you are getting ready to retire soon, you should consider downsizing. This is a great opportunity for you to free up a bit of extra cash for retirement and find the perfect location for your home. Consider taking a look at some of the houses available in your local area, and don’t forget to reach out to a professional with any questions.