Posts Tagged ‘home-buying’

The Truth is: ARMs Differ and Can Have Great Value.

ARMHome buyers often focus on obtaining the lowest possible rate on a 30-year loan, but most mortgage loans are used for only three. Cash out transactions for improvements, additions, repairs, weddings, tuition and major purchases occur with great frequency. If you think you might refinance for any reason anytime in the next seven years, read on. 

Lower Rates, Flexible Terms – Today, most Adjustable Rate Mortgages (ARMs) are “hybrids.” They start out at a fixed rate for the first 3, 5, 7 or even 10 years. During this time, you save on interest cost, and even though your payment is less, you still pay more toward principal. 

Inside Information – Lenders give you a discounted rate up front because they know the rate will float with the market later on. If you sell your home or refinance again prior to that happening, it’s their loss. You have the advantage here because you control the timing of your next step. 

Managed Risk – One way to prepare for the possibility of a higher rate and payment later is to pay extra principal each month to reduce your balance faster. If the rate ultimately adjusts up, your balance will be lower and the payment change will be less as a result. As well, you would already be accustomed to paying more. 

The Bottom Line – A fixed rate loan provides the certainty that it will never change. A hybrid ARM provides a guaranteed savings but for a limited period of time. The best way to decide is to balance your expectations for using any particular loan with the peace of mind that can come from being assured of stability, even if your time frame changes. 

Either way, we’re here to help you explore the pros and cons and to come to a conclusion that’s uniquely right for you.

Whether you are purchasing or refinancing a home, call us now at (626) 799-0882 or 1-800-445-PFCU to get started on the best mortgage loan solution for you.

 

Credit 101: How To Improve Your Credit Score

Scary Credit

If your loan officer reacts like this to your credit file, there are things you can do to improve the situation.

In the Dark About Credit Scoring? We’re Here to Shed Some Light on it for You
The affordability of major purchases often depends upon the quality of your credit score. Unfortunately for many people, the recession has taken a high toll on their credit scores, and banks and other loan providers are making it difficult to obtain reasonable interest rates. Unless your credit score is 720 or higher, you are probably paying more in interest charges than you’d like to. If this is the case, here are some suggestions to get you back on track to spectacular credit.

Check Your Credit Report
The first thing you can do to improve your credit score is to request free copies of your credit report from each of the three major credit reporting agencies: TransUnion, Experian and Equifax. You have a right to receive one free copy per year. Your credit report will list all current debt and your debt history, including: student loans, credit cards, mortgages, etc. It will also include information regarding your payment history, how much of the original balance is left, and other important details.

One important reason to check your credit report is to look for any mistakes. Many people find small inaccuracies that could be having a large effect on their credit score. Often, this is a debt that was paid off but is still reported as outstanding. Or, someone else’s debt could be incorrectly listed as yours …especially if you have a common name, or share a name with a family member. Report inaccuracies immediately to the proper reporting agency, which will follow up with the lender to confirm your claim.

Know Your Credit Score
If you don’t know what your credit score is, shelling out a few bucks to get it may be a good idea. Upon receiving your report from the three major reporting agencies, they will refer you to companies that will provide your score for a fee. Be sure to read the fine print, especially if you search for your score yourself online … many will advertise a free score, but unknowingly sign you up for a service that charges a high monthly fee. If you applied for a mortgage after January 1, 2011, the lender will be required to reveal new information about your credit score.

Make Regular Payments
Making regular, on-time payments on your credit cards, loans, and lines of credit will boost your credit score higher. Lenders also review how much outstanding debt you have in your accounts. Balances below 30% of your total available credit could improve your score.

Consolidate Your Debt
While creditors like to see that you have a long credit history, keeping a large number of credit sources available is not a good idea. If you have five cards with a $10,000 limit on each card, creditors will consider you as having $50,000 available in credit. Their assumption is that you may go out and max out your credit cards, adding debt on top of whatever loan they give you. Keep it simple; limit your credit cards and loans. Contact PFCU to ask if you qualify to consolidate your debt to a low-cost credit union credit card, personal loan or line of credit. Be sure to check out the  National Endowment for Financial Education’s free, comprehensive program Smart About Money found at www.smartaboutmoney.org . You’ll gain valuable insight and make a solid plan for the future. No one sees the information but you and no one tries to sell you anything. It’s just a tool to help you.

When You Need a Loan, Search for the Best Deal
PFCU offers competitive rates and flexible terms for car loans. credit cards, signature loans and mortgages.  Do your homework to get the best deal.

PFCU also recommends contacting the National Foundation for Consumer Credit Counseling if you need additional help managing debt and improving your financial education.