A friend sent me a link to an article by the Federal Trade Commission (FTC) on Consumer Credit. There is a lot of useful information about credit reports and scores, how to improve a credit score, how to deal with creditors and collectors, how to protect yourself from identity theft and more.
As always, feel free to drop a line (firstname.lastname@example.org) if you have any questions.
Are you planning to refinance your current mortgage to take advantage of low mortgage rates but have a Home Equity Loan or Line of Credit you don't want to lose?
It is a common misconception that you must close your Home Equity Loan or Line of Credit in order to refinance your current mortgage. While some loan programs may require Home Equity Loans or Lines of Credit (subordinate liens) to be closed, others programs may be willing to allow borrowers to keep these open pending the existing lender's approval.
By default, when a first (or primary) mortgage closes, the subordinate lien (a Home Equity Loan or Line of Credit) will move into the first position. As most primary mortgages are for a higher dollar amount, the loan programs require that they acquire the first position. To enable this to happen when you refinance your primary mortgage, the new lender must request that Home Equity Loan or Line of Credit will subordinate to their new lien.
Okay, enough of the technical talk. If you find yourself in the position where you plan to refinance your mortgage and want to keep your Home Equity Loan or Line of Credit open, ask your Loan Officer to request a Subordination Agreement. You may be able to take advantage of a new low rate on your mortgage while keeping your Home Equity Loan or Line open, which often times avoids repayment of closing cost fees.
As always, feel free to be in touch if you have any questions.
Credit ratings are complied by the three credit bureaus, Equifax, TransUnion, and Experian. They all have slightly different methods and they are ever evolving but basically, credit scores are a compilation of the following:
• Payment History
• Outstanding Debt
• Length of Time on Established Accounts
• Number of Inquiries
• Types of Credit
The list is in order of most important to least important with regards of impact on your credit rating. It is important to remember to always pay your bills on time. If you are unable to make a payment, talk to your lender. Most lenders will work with customers who need help.
Be sure not to max out credit cards and other credit lines. As outstanding balances reach credit limits, this has a negative impact on your credit rating. Be sure to keep old accounts open, this helps establish a positive history. Keep the number of inquires to a minimum and diversify your borrowing methods (don't have all credit card debt).
Although times may be tough, the most important factor is to make payments. If you struggle making payments talk to your lender. I can't emphasize that enough.
If you are working to rebuild your credit, remember the factors that impact your rating. Every little bit will help get you back on the road to an improved credit rating.
A great step in evaluating your position is to get a free copy of your credit report. Although the credit bureaus charge for your credit score, each bureau is obligated to provide you with one free copy of your report every year. You can obtain your free copy by visiting www.annualcreditreport.com.
Feel free to be in touch with comments, suggestions, or questions.
Wade Barnes email@example.com