Don’t Fall for These 5 Credit Score Myths

If one of your goals for the new year is to buy a new home, then a vital part of that goal is to improve your credit score. Don’t let these credit score myths catch you off guard.

1. Credit cards should always have a modest balance. The truth is that credit scores are positively impacted by bills that are paid off and negatively impacted by credit lines that are constantly maxed out.

2. It’s not a big deal if you make a payment on a credit card a day or two late, as long as you pay it off in full. The reality is that your credit score benefits from timely payments of the balance due. Scores can drop as much as 100 points because of late payments.

3. To eliminate negative credit history, close out old credit cards. Since the credit history from a closed card follows you for seven years, take advantage of the fact that the longer you use a particular line of credit in a responsible manner, the more positive impact it will have on your credit score.

4. If you check your credit score too often, your score will go down. The truth is that when you do a check on your own, it will only be a “soft” hit, and your score won’t be impacted. It is important that you monitor your score periodically.

5. Credit scores are affected by your age, sex and other personal non-monetary issues. This is a myth because federal law prohibits discrimination based on issues like race, national origin or sex. What matters are concerns related to income and debt, expenses and what your credit history is.

The area of credit scores can be tricky to navigate. I invite you to call or email me for an appointment so we can set these myths aside and be able to maximize your credit score.

Avoid These 4 Mortgage Mistakes (and Save Money)

If you are buying a home, make sure you watch out for these mistakes.

1. Going house hunting before finding a mortgage. You will get a better loan if you have the opportunity to take time to shop for it rather than trying to make an acceptable offer on a home without your financing being in place. Your negotiating will be more successful if you can demonstrate that you are a qualified buyer.

2. Taking the first loan offering because it looks okay. Just because the interest rate is the lowest you have seen, that doesn’t mean it’s the best loan for you. You must make side-by-side comparisons of different loans. Compare interest rates, annual percentage rates (APRs) and loan fees on the “loan estimate” sheets of various loans.

3. Making your loan selection based on marketing promotions. Beware of advertising that says that the lender will be paying for some of your loan fees, such as mortgage insurance or all of your closing costs. You will actually be paying higher interest for the loan to offset what the lender is offering.

4. Not knowing how to read the loan documents. Loan documents have simplified since 2015, making it easier to compare loans. In layman’s terms, the loan estimate will break down the APR, the interest rate, payment, loan terms and cash needed at closing. Just prior to closing, you will receive a similar-looking document, but the line items will be actual amounts, not estimates.

Contact me for an appointment prior to house shopping so we can avoid these mistakes and get you the best loan for your money.