Jan McNulty

Broker, CDPE, SFR, CRS

Financing and You ?Straight answers to your questions                
Fall 2008

Recent headlines have brought even more attention to the changes in the real estate market. However, in my opinion, they news has not been focused on the opportunities possible with still low interest rates, and sellers more than willing to help buyers in closing costs, rate buy-downs, and in price.

Take advantage of Current Interest Rates

2 ways to take advantage of the current interest rates is to refinance an existing loan, or secondly buy a new home. When purchasing a home you may find a ?down payment assistance program? if you are a first time buyer or have not owned a home for 3 years. Some sellers are actually offering points to help a buyer with the closing costs or to buy down the rate.

What does FICO mean?

Fair Isaac Corporation established and trademarked the term FICO.  With my research, I never found the O, other than Oh, darn or Oh, good. (I am Just kidding, folks.). It probably stands for optimization or some meaningless O word. FICO is  a formula that is trying to figure out your statistical analysis of repayment. If you pay your bills on time, you will not have a problem. If, for example you ?forgot?  or ?put off? the decision to pay your taxes or your student loans, you will have a major problem.

Why the ?possible? opportunities?

Since rates are so have a connection or a relationship with your FICO score, it depends what your FICO score really is.

What is a Credit Score (FICO-Fair Isaac Corporation?

Your credit score is generated by a math formula that is meant to predict credit worthiness with a score range of 350-850. Obviously the higher the number the more credit worthy you are seen by a bank or lending institution.

So what makes up your Credit Score?

Here?s the percentage breakdown of a FICO score:

*         35%-Payment history.

*         30%-Debt ratio

*         15%- Length of credit history

*         10%-Types of credit: installment, revolving and loans

*         10%-Number of credit inquiries.

 

#1 major mistake by consumers who are looking to increase their score?

Don?t close your old Credit Cards! Cleaning up your credit profile by getting rid of old or unused credit cards sounds like a good idea ? and it may be from an overall credit management perspective. If you are tempted to charge more than you should just because you have more availability to credit, then getting rid of that temptation by closing some credit cards might be your best course of action.

However, your FICO score takes into consideration something called a "credit utilization ratio". This ratio basically looks at your total used credit in relation to your total available credit; the higher this ratio is, the more it can negatively affect your FICO score. So, by closing an old or unused card, you are essentially wiping away some of your available credit and thereby increasing your credit utilization ratio.

For more information, contact Jan McNulty, who can introduce you to a lender that will give you the ?straight? talk.