Author: Emily Gregory

If you’re in the market to buy a home, you probably already have a good idea what your credit score is. Like many prospective homeowners, you may even check it daily to see how and when it moves. But how much do you really know about the way your credit score is calculated – and how that magical number really impacts your mortgage approval when the time comes to apply?

Understanding what your credit score is, how it’s calculated, and its role in the mortgage approval process is essential for any aspiring homeowner. In this article, we’ll provide you with an overview of how your score is calculated, what you can do to improve it, and what it means for your homeownership journey.

What Is Your Credit Score?

Your credit score is a combination of several financial data points, totaling up to a three-digit number that typically ranges from 300 to 850. That number serves as a reflection of your creditworthiness – essentially, how risky of an investment you are – for lenders like banks, credit card companies, and insurance providers. The higher your number, the “safer” you are considered by these institutions.

 

Calculating Your Credit

Several factors contribute to your credit score, which can be broken down into five categories – each with a different level of impact on your overall score:

Payment History: Payment history makes up the biggest piece of the pie when calculating your credit score. Late or missed payments and public records of bankruptcy, foreclosure, or collections can negatively impact you. For most people, the single best thing you can do to keep your credit score in good shape is pay your bills, loans, and other debts on time.

Amount Owed: This is a calculation of how much debt you currently hold. Your total debt is added up and then used to determine your credit utilization – the percentage of credit being used from your total credit limit. Lower utilization is better for your credit score, so keeping a high credit card balance or holding large amounts of debt can negatively impact your score. Utilizing below 30% of your available credit is considered good practice for credit scoring purposes.

Length of Credit History: The longer you’ve been borrowing money (and paying it back) the better you look to lenders. The length of your credit history is calculated by adding up how long each of your loans or lines of credit have been open, along with a few additional factors that come into play with previous accounts that have been closed. For this reason, opening too many new accounts can cause your score to take a hit, while keeping older accounts open may sometimes be a good idea.

Types of Credit: Simply put, when it comes to credit, variety is a good thing. Having a mix of credit types, like credit cards, auto loans, and mortgages can indicate to lenders that you are capable of managing your finances and that you have experience handling debt.

New Credit: Opening multiple new credit accounts within a short period can be seen as risky behavior and may lower your score. After all, if someone has recently borrowed money, there’s a chance they may not pay it back – and in the case of credit cards, this could indicate a change in finances that requires borrowing more money. If you’re getting ready to apply for a mortgage approval, you should hold off on opening new lines of credit if it’s at all avoidable.

 

The Impact on Mortgage Pre-Qualification

Because lenders use your credit score to assess risk when evaluating your loan application, your score is a key factor in both getting your pre-qualification as well as determining the interest rate you’ll receive if and when approved. With a higher credit score, you’re more likely to get lower interest rates and qualify for larger loan amounts.

Furthermore, there are a variety of programs available to help homebuyers make their purchase process easier and more affordable, including several that are geared toward buyers with less-than-perfect credit scores. As always, if you’re  looking for advice and guidance on your homebuying strategy, it can help to connect with an experienced loan officer to discuss options.

Wrapping Up

As you make your way along your homebuying journey, remember that your credit score is one of your most valuable assets. Knowing how your score is calculated and what you can do to improve it can help you set yourself up for success  – so make sure you’re staying on top of it. With the right knowledge and planning, your score can be a powerful tool to help you achieve your homeownership goals!

Purchasing a condo is a significant decision that often comes with a host of myths and misconceptions. While condos can be an excellent choice for many buyers, these myths can lead to confusion and uncertainty. In this blog post, we aim to dispel common myths about condo purchases, helping you make an informed decision when considering this unique form of homeownership.

Myth 1: Condos Are Always Cheaper Than Houses

One of the most prevalent myths is that condos are inherently more affordable than houses. While it’s true that condos can offer a more budget-friendly entry point into homeownership, their price can vary significantly depending on factors such as location, size, and amenities. Some condos in prime urban areas can be as expensive, if not more so, than single-family homes in suburban neighborhoods.

Myth 2: Condos Are Just Like Apartments

Condos and apartments may seem similar because they both involve shared spaces and often have homeowner associations (HOAs). However, there’s a crucial distinction: condo units are owned by individuals, whereas apartment units are typically rented. When you buy a condo, you own the unit, and you may have more control over customization and maintenance compared to renting an apartment.

Myth 3: Condo Living Is Only for Seniors or Singles

Condos are not exclusively for seniors or singles. They cater to a diverse range of homeowners, including families, young professionals, and retirees. Condo communities often offer amenities and services that appeal to a wide demographic, making them suitable for various lifestyles and life stages.

Myth 4: Condo Owners Have No Say in Community Decisions

Many prospective condo buyers worry that they’ll have no say in the decisions affecting their community. While there are HOAs that establish rules and guidelines, condo owners typically have a voice in shaping these rules through community meetings and elections. It’s essential to understand the HOA’s structure and how decisions are made before purchasing.

Myth 5: Condos Are Maintenance-Free

Condos do offer some maintenance benefits, as common areas are often taken care of by the HOA. However, this doesn’t mean you’re entirely free from maintenance responsibilities. Condo owners are usually responsible for the maintenance of their individual units. It’s crucial to review the HOA’s policies to understand what maintenance tasks are covered and what falls under your responsibility.

Myth 6: Condos Don’t Appreciate in Value

The appreciation of condo values can vary based on factors like location and market conditions, but it’s a misconception that condos don’t appreciate. Well-maintained and strategically located condos can indeed appreciate over time. It’s essential to research the local real estate market and the condo’s history before making a purchase.

Myth 7: Condo Fees Are a Waste of Money

Condo fees are often viewed negatively, but they serve a valuable purpose. These fees cover common area maintenance, amenities, insurance, and more, ensuring that the property remains well-maintained and functioning smoothly. Consider condo fees as an investment in the quality of your living environment.

Myth 8: Condos Offer Limited Privacy

While condos involve shared spaces and neighbors in close proximity, privacy can still be maintained. Many condo units are designed to maximize privacy with features like soundproofing, private balconies, and well-placed windows. Additionally, condo communities often have rules in place to respect residents’ privacy.

Dispelling these common myths about condo purchases can help you make a more informed decision when considering this form of homeownership. Condos offer a unique blend of convenience, amenities, and community living that can be an excellent fit for a wide range of individuals and families. By understanding the reality behind these myths, you can approach condo shopping with clarity and confidence. Are you looking to buy a condo? Reach out to one of our qualified loan officers today!

Purchasing a home can be an exhilarating experience, but it can also come with its fair share of challenges, especially when it comes to addressing repairs and improvements. One powerful tool that can help streamline this process is the escrow holdback for repairs. In this comprehensive guide, we’ll dive into what an escrow holdback is, how it works, and why it can be a game-changer in the world of real estate.

Understanding the Basics

An escrow holdback for repairs is a financial arrangement where a portion of the homebuyer’s funds is withheld by the lender or escrow agent until specific repairs or improvements are completed. This arrangement is typically used when there are issues with the property that need attention before the sale can close.

When Is an Escrow Holdback Needed?

There are various situations where an escrow holdback may be necessary:

Repairs Identified During Inspection: If the home inspection uncovers issues that need immediate attention, an escrow holdback can provide a solution. It allows the sale to proceed while ensuring that repairs are completed post-closing.

Incomplete Construction: For newly constructed homes that aren’t fully finished, an escrow holdback can be used to ensure that agreed-upon construction or finishing work is carried out as intended.

Insurance Claims: In cases where damage is discovered after the contract is signed, an escrow holdback can help manage the repair process, ensuring that the property is restored to its proper condition.

How Does It Work?

Here’s a step-by-step breakdown of how an escrow holdback for repairs typically works:

Identification of Repairs: The appraiser, buyer, and seller, often with input from a home inspector or contractor, identify the necessary repairs or improvements.

Agreement on Costs: The parties agree on the estimated cost of the repairs and how much money will be held in escrow to cover these expenses. The standard holdback amount is 150% of the estimated cost.

Escrow Account Setup: The agreed-upon funds are placed in an escrow account, which is typically managed by the closing agent or title company.

Closing and Funding: The sale proceeds as usual, with the funds for the repairs held in escrow rather than being disbursed to the seller.

Repair Timeline: A timeline is established for completing the repairs. This can vary but is often within 30 to 90 days after closing.

Inspection and Verification: After the repairs are completed, a final inspection is conducted to ensure that the work was done to the agreed-upon standards.

Disbursement: Once the repairs are verified, the funds held in escrow are released to cover the repair costs.

Benefits of Escrow Holdbacks

Smooth Transactions: Escrow holdbacks allow transactions to move forward, even when repairs are needed. This benefits both buyers and sellers.

Peace of Mind: Buyers can proceed with the purchase knowing that necessary repairs will be addressed, and sellers can close the sale without delay.

Financial Protection: An escrow holdback protects the buyer by ensuring that the funds for repairs are available, reducing the risk of disputes or unexpected expenses.

Considerations and Caveats

While escrow holdbacks are powerful tools, there are some important considerations:

Clear Agreements: It’s crucial to have a clear and detailed agreement outlining the repairs, costs, and timeline.

Contractor Selection: Choosing a reputable contractor is essential to ensure that repairs are completed satisfactorily.

Proper Documentation: Keep thorough records of the repair process, including invoices, receipts, and inspection reports.

In conclusion, escrow holdbacks for repairs can be a valuable solution in real estate transactions, providing a structured way to address necessary repairs while keeping the sale on track. When used wisely and with proper planning, escrow holdbacks benefit both buyers and sellers, making the home buying process smoother and more manageable.

Ready to take the next step? Contact us today for expert guidance and a seamless experience.

*Escrow Holdbacks are subject to approval

Teaching is a profession that shapes the future, one student at a time. It’s a calling driven by passion, dedication, and a deep commitment to education. However, for many educators, the dream of homeownership can sometimes seem like an elusive goal due to financial challenges. In this blog post, we will guide you through the journey of buying a home as an educator, sharing insights and tips that can turn your dream of homeownership into a reality.

The Quest Begins: Searching for the Perfect Space

Finding the right home is akin to solving complex equations. It starts with a vision, a dream of a place where you can unwind, recharge, and call your own.

Here’s how to begin your journey:

Define Your Vision: Before you start searching for homes, take some time to define your vision. What kind of home are you looking for? What neighborhoods align with your lifestyle and budget? Create a wish list to guide your search.

Budget Realistically: Teaching is a noble profession, but it often comes with financial constraints. Calculate your budget realistically, factoring in your income, expenses, and potential future changes. This will help you determine your home-buying capacity.

Research Mortgage Options: Explore various mortgage options, especially those tailored to educators or first-time homebuyers. Understanding the terms, interest rates, and down payment requirements is crucial to making an informed decision.

Grants and Assistance Programs: Many regions offer grants and assistance programs specifically for educators. These programs can provide down payment assistance or reduced interest rates, making homeownership more attainable.

One of our own programs we offer is the First Home Heroes program. This initiative reduces some of the out-of-pocket closing costs associated with the loan application process. This reduction is made possible by eliminating certain fees during the lending process. Eligible borrowers will have their application, underwriting, and processing fees credited back to them at the time of closing, up to a maximum of $1,585.

Budgeting Like a Pro: Budgeting becomes your superpower on this journey. Track your spending, cut unnecessary expenses, and save diligently. Every dollar saved is a step closer to your dream home.

Our Sanctuary: Finding the Perfect Home

After months of dedicated effort, you’ll discover your sanctuary. Your home won’t just be bricks and mortar; it will be where you continue to grow, create, and inspire. Each room will tell a story, and every corner will hold memories of your journey.

Gratitude to Our Supporters

In the classroom, teaching can be a solitary profession, but beyond those walls, it’s a collaborative effort. Take a moment to express gratitude to your family, friends, and mentors who offer unwavering support and guidance throughout this journey.

Owning a home as an educator is not just a dream; it’s a tangible goal within your reach. By defining your vision, budgeting wisely, exploring financial assistance options, and leaning on your support network, you can turn the dream of homeownership into a reality. Your path may have its challenges, but with determination and the right knowledge, you can unlock the door to your dream home. So, fellow educators, are you ready to begin this exciting journey towards homeownership? Your dream home awaits! Let’s embark on this exciting journey together, educators! Reach out to one of our loan officers today.

Whether you’ve been browsing dream homes on Zillow for months or you’re just taking your first steps into the housing market, you’ve probably come to the same realization: buying a house is a big investment. In today’s fast-paced and often competitive real estate environment, it’s more important than ever to be strategic in your homebuying plan.

One of the best ways to accomplish this is by setting a budget. Managing your finances and saving effectively can make all the difference in how much house you can afford, and how you go about making your offer. In this article, we’ll explore the basics of budgeting and share some tips to help you save for your dream home.

Understanding the Power of Budgeting

Yes, budgeting deals with tracking your expenses – but it’s also much more than just that. Budgeting is a strategic approach to money management that can help you make progress toward your goals while staying on top of your financial responsibilities.

Maybe you consider yourself good with money, or maybe you struggle with managing your finances. Either way, setting up and maintaining a budget can provide many benefits, including clarifying your personal and financial goals, minimizing bad spending habits, encouraging responsible savings practices, and more.

Building Your Budget

Finding your dream home is one thing – figuring out how to pay for it is another. If you’re not sure how to get started with your savings budget, we’ve got you covered.

• Track

The first step for any effective budget is getting visibility into your finances. That means assessing your current income, expenses, and debts. Over the course of a few months (the longer, the better!) track all your income, expenses, and debts.

• Categorize

Divide your expenses into fixed (rent, utilities, loan payments) and variable (dining out, entertainment, gifts). Then, prioritize according to what’s essential and what can be cut down. It’s not easy, but even something as simple as canceling a few subscription services or stepping up your meal prep game can add up to big savings in the long run.

• Set Goals
  Determine how much you need to save by making an honest estimate of your expected costs. While the down payment is often the biggest savings consideration for prospective homebuyers , remember that a house is a long term investment that carries risk and responsibilities. Don’t neglect to account for closing costs, property taxes, homeowners insurance, the cost of utilities, move-in expenses and repairs.

Budgeting Tips

With your budget in place, the next step is sticking to it. Sounds simple, but like most things, it takes practice and effort to get the best results. Here are a few tips to help you on your way.

• Create a Designated Account

Open a separate savings account specific to your goals. This helps prevent accidental spending and allows you to see your progress over time, which can be a great motivator. Shop around for a good interest rate – you’ll feel better stashing your money in an account when you know it’s returning some interest!

• Automate Savings

Set up automatic transfers into this savings account on a regular basis. Putting more money into your savings can help cut down on the temptation to spend more and can also ease the psychological sting that sometimes comes with setting money aside for the long term. One note of caution – be sure that any automatic deposits are sustainable. The last thing you want is to overdraft your account or miss a payment due to over-ambitious saving!

• Review and Revise

No budget is perfect, and household finances can change over time. A good budget has some built-in flexibility and should be reevaluated periodically.

Got a raise that’s bringing in extra cash? Great – factor it into the budget to avoid spending it impulsively. Likewise, if you’ve encountered unexpected expenses or cost of living increases, update your budget to ensure you’re still meeting your financial commitments first and foremost.

 

Budgeting for Your Dream Home

Budgeting can feel restrictive, but a good budget is an empowering tool for financial freedom. By creating a detailed budget, setting achievable goals, and practicing good spending and savings habits, you’ll be well on your way to saving for that dream home.

To further explore your financial options and learn more about your mortgage options for buying your dream home, reach out to our experienced loan officers. We’re here to help you achieve your homeownership goals.