Making 2017 Resolutions

The uncertainty in interest rates gives new considerations to buying or refinancing a home. Last month’s rate increases challenged many borrowers who were considering refinancing, because it no longer made financial sense for some. As we look to the New Year, we can resolve to face the challenges of the housing market by tracking and repairing credit scores as well as looking to the benefits of ARMS that have a low fixed-rate for the first few years.

If a buyer plans to keep a home for at least five years, it could make financial sense to get an ARM [Adjustable Rate Mortgage] with a seven-year fixed rate. Home-equity lines of credit are also a consideration for others.

This year, Fannie Mae as a government sponsored entity that buys loans and sells them as mortgage-backed securities added “trended credit-reports” to the mix of automated underwriting. Instead of a credit report that only states the balances of credit cards and such and whether payments were made on time, this new system gives a lender more information including how borrowers treat credit. This can be viewed as a positive for many who carry high balances on cards.

Here are a few tips for resolving to track and repair credit scores:

Review your credit score. Under federal law, you can get a free credit report from all three agencies, Experian, Equifax and TransUnion at no charge once a year.

When in the mortgage process. Don’t open or close any credit cards or take out a car loan. During the Christmas season, it’s easy to get fast credit; however, it best to not make any changes just before or during the mortgage approval process.

It is what it is? If you absolutely need to buy now and can’t wait to repair credit, there are lending options for those with a credit score as low as 580; however, you should expect to pay more in annual interest rates. Once credit is repaired, refinancing becomes an option.

It’s always helpful to find a trusted mortgage advisor who can work through various options that may work in your situation. Working with a lender offers an opportunity for a “rapid re-score” which can update improvements to credit scores in as little as a few days.

Make that New Year’s Resolution! I can help make it happen.

We lend where we live,

Michael Pattullo
MLO# 229675
Mortgage Advisor
360.607.9312
mpattullo@peakmtg.com
Peak Mortgage
Peakmtgnw.com