Pam Moore wrote an article about what business could do to inspire her after she clicks on their Facebook page as a “friend”. She emphasizes that businesses must find and display value for their readers.
What can I do to make your job, business or life better?
Putting some thoughts together I realized that I wanted to develop a list of items that all consumers need to be aware of when thinking about borrowing money with a mortgage. A must know list!
1. Credit Scores. Your middle FICO credit score is a huge factor in the overall cost of your new mortgage.
Many of you have sought car loans or have a credit monitoring service that you have subscribed to and they spit out credit scores for your review. Too often, these credit scores are based on the Vantage scoring model. The new model was developed through a collaborative effort by all three credit reporting agencies, Equifax, Experian and TransUnion as a competitive product. It typically produces a high score than the Fair Issac (FICO) system.
The FICO has been in place for some time and is currently the score of choice for mortgage lenders. When I tell you your score is lower than what you thought it’s probably because it’s not a FICO score.
And it’s your middle FICO that determines approval and pricing. For a married couple or joint borrowers it’s the LOWER of the two or more middle FICO scores that are used.
2. Know Where You Spend Your Money. Track your expenses for several months if you don’t already do so. Understand your spending patterns. Know the expenses that are mandatory: housing, insurance, utilities, auto, etc. If you are changing housing expect those expense associated with the new property to change. Pay particular attention to the discretionary items like entertainment, eating out and other expenses of choice.
3. Get Approved before Looking. At least speak with a mortgage professional. Discuss your goals, your fears, your self imposed limitations. Determine the most important aspects of what you want to achieve. Determine the best way to achieve them. Review your credit report and get an automated underwriting approval (AUS). It is painless but oh, so important.
4. Pay Yourself First. We work hard for our money. Make sure some of it keeps working for you. Tax deferred or sheltered retirement plans are ideal places to stash excess cash. If you do this, then pay off and eliminate non tax deducible loans.
5. Make a Plan and Stick to It. So easy. So simple. Yet, so many of us fail to do it.
Make a plan! It doesn’t have to be elaborate. But, you must write it down. Put it on paper or in a digital file. And check your progress from time to time. Make adjustments as necessary.
Remember the earthquake this past summer? No one was expecting that.