New Year, New Goals! Tips for Improving your Credit Score in 2020.

If you’re considering purchasing or refinancing a home, it’s a good idea to look at your credit score first. Your credit score will directly impact your interest rate and the loan programs that you qualify for. When it comes to a home loan, improving your score can save you money and give you a larger variety of options. The higher your score, the more you can save. Here are some tips to boost those numbers in 2020!

  1. Avoid Late Payments. Paying bills on time is the single most important factor in your credit score. If you have a late payment on your report that you believe is in error – you can contact the credit bureaus to dispute it and have your score corrected.
  2. Decrease Your Overall Credit Utilization. Credit bureaus calculate your overall credit limit versus how much credit you’re currently using, and it’s best to have a ratio below 30%. One quick way to decrease your utilization is to call your credit card issuers and request a higher limit on your existing cards. This higher limit will lower your ratio without adding any hard inquiries to your report. Paying down your existing balances will also reduce your ratio.
  3. Limit New Accounts. Hard Inquiries show up on your report whenever you apply for new credit. Too many hard inquiries can lower your score, but their impact does fade over time. Be cautious of opening too many new accounts at once and try to avoid hard inquiries 6-12 months before applying for a mortgage loan. Opening new accounts can also reduce your average length of credit, which can further impact your score.
  4. Don’t Close Inactive Accounts. Surprisingly, closing old credit accounts will directly affect your credit score. This is because closing old accounts can shorten your length of credit and raise your credit utilization. If you do have credit cards you no longer use, you are better off holding on to them or renegotiating for a better interest rate to start using them again. If you feel you still want to close some accounts, wait it out until after the home buying process, as it may deduct points each time you close an account.
  5. Dispute Errors. Review your credit report regularly and dispute any errors that might be bringing down your score. Simply send a letter directly to the credit bureau with your explanation of what the errors were. The credit bureau will review your case and respond back in around 30 days. If it is found to be an error, it should be removed directly from your credit report. According to the Federal Trade Commission, as of 2012, 5% of consumers had errors on their credit reports which could have resulted in less favorable terms for loans.

Let’s wrap up with a few fun credit score facts:

  • Credit scores range from 300 – to 850

  • Any score over 810 is considered “perfect” because raising your score beyond that point doesn’t offer any real increase in benefits from creditors.

  • The average 2019 FICO credit score was 706, and the average 2019 Vantage score was 682!

Interested in learning more about First Home Mortgage? Feel free to reach out to one of our loan officers today!

Mortgage Interest Credit

Depending on your annual income, you may qualify for a mortgage interest credit. In order to receive this credit, you will need a Mortgage Credit Certificate (MCC). The IRS will require the MCC in order to grant the interest credit so be sure to speak with a Loan Officer to find out if you qualify.

The Mortgage Credit Certificate allows first-time homebuyers to reduce tax liability dollar-for-dollar by a percentage of the interest paid on the mortgage. This credit can range from 20% to 35%, depending on the MCC program. However, any interest not included as part of the tax credit can still be eligible for home mortgage interest deductions on your federal tax returns.

If you purchased a home with the MCC this year be sure to have these handy when filing your taxes this season:

  • Mortgage Credit Certificate (issued directly after closing)
  • IRS Form 8396 (attach this to your 1040 form)

We recommend consulting with a tax professional so that you can best maximize your savings! And for additional information, contact one of our loan officers.


Tips for Preparing for Tax Season

2019 has come to an end which means tax season is right around the corner. Soon it will be time to prepare your 2019 tax returns and it pays to be ready! Getting prepared early can not only save you time and stress but potentially money.  It’s especially important if you have experienced major changes throughout the year such as getting married or buying a home. The IRS encourages early preparation and has recently shared a few tips that can give you a head start.

Always making sure you’re paid up on your taxes is important. The IRS expects that you will have paid most of your tax bill by the time you file your return. If your taxes are being withheld from your pay, chances are that’s enough to cover your total bill and even leaves you with extra for a refund. But keep in mind life events can happen which affect your tax withholding.  You will want to make sure your withholding will also take care of any other income you receive from other sources such as a business or investments.

Of course, you won’t start receiving your W-2s or 1099s until January at the earliest, but there are a few things you can do while you wait. Gathering important records and documents ahead of time will allow for a quicker return. Making sure your address is up to date with your employer and investment providers will ensure you receive these forms in a timely manner. Creating a checklist is also very helpful and can be used every year. Look at your old tax records to compile of list of what materials you were sent. Use that list to create a checklist so you know what to expect throughout the tax season. If you have recently purchased a home, there are some additional documents you may need to gather such as the settlement statement, property tax statement, and if you’re a first-time homebuyer, your Mortgage Credit Certificate.

When you’re all set to file, consider doing so electronically! Every year the IRS is encouraging taxpayers to file electronically for many reasons. Not only is filing electronically quicker and more secure, but it also’s easier and highly accurate. Anyone with a bank account is eligible for direct deposit. Meaning your refund will be automatically sent to your bank account, so you won’t have to wait to receive the check in the mail.

Now that the holiday season is over, preparing for tax season should be at the forefront of your mind. Taking steps to ready yourself will prove to be beneficial in the future.


Calculating Your Home Equity

Home equity is the portion of your home that you’ve paid off — your stake in the property, as opposed to the lender’s. For many homeowners, this is their most valuable asset. And the best part is that it often increases without you having to do anything more than making your regular monthly mortgage payment.

So what is it exactly? 

Equity is the portion of the home that you truly own and does not need to be repaid to any lender. In other words, it is the appraised value of your home minus any outstanding mortgage and loan balances. In most cases, home equity builds over time as you pay down mortgage balances or add value to your home.

How is it calculated?

Current Appraised Value – Mortgage Loan Balance = Home Equity

Subtract the amount you owe on your home loan/s from its appraised value to get how much equity you have in your home.


Appraised Value is $500,000 – $230,000 Loan Balance = $270,000 in equity

How do you use your home’s equity to make renovations?

A loan (second mortgage) allows you to borrow a certain amount for your renovation. The equity in your home is used as collateral, giving you free access to spend the money on your home project.

A HELOC is typically a variable-rate line of credit based on your equity, that allows you to borrow and repay repeatedly.

You may also have the ability to refinance, which allows you to turn your equity into cash –  referred to as “cash-out” refinancing.  This gives you access to the equity without selling your home.

Talk to a Loan Officer to learn more about your options.

Which Renovations Have the Highest Impact on Your Home’s Value?

Remodeling your home is a wonderful way to make it your own when you first move in, or to update the space as your needs and styles change over time. Since home renovations can be pricey, balancing your budget and wish list can be tricky. Fortunately, there are lots of projects that can make you love your home even more, while also boosting its value. Increasing your home’s overall value increases your equity! This means that not only will you see a return on your investment when you sell your home, but you’ll also have a lower loan to value ratio while you live in it, which can impact your options when refinancing, and even potentially eliminate the need for a mortgage insurance.

The “2019 Cost Vs Value Report” (, revealed which home renovations will give you the highest percentage of return on investment, and what they cost on average. According to the study, the top five renovations that provide the biggest bang for your buck are:

1. Garage door replacement

• Average out-of-pocket: $3,611
• Average return on investment: $3,520
• Percentage of cost recouped: 97.5%

2. Manufactured stone veneer

• Average out-of-pocket: $8,907
• Average return on investment: $8,449
• Percentage of cost recouped: 94.9%

3. Minor Kitchen Remodel

• Average out-of-pocket: $22.507
• Average return on investment: $18,123
• Percentage of cost recouped: 80.5%

4. Deck addition (wood)

• Average out-of-pocket: $13,333
• Average return on investment: $10,083
• Percentage of cost recouped: 75.6%

5. Siding Replacement

• Average out-of-pocket: $16,036
• Average return on investment: $12,119
• Percentage of cost recouped: $75.6%

Renovating your home can be a wonderful way to boost your enjoyment and your equity! Find more information from this study, including how project costs and values were calculated, at

Thinking about purchasing a fixer-upper, or refinancing to free up funds for your home renovation? Contact one of our Loan Officers today!

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