Tag Archives: credit score
Take 5 Steps Now To Become A First Time Homebuyer in Delaware in 2013

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com/first-time-homebuyers?utm_campaign=First-Time-Homebuyers” title=”first time home buyer” target=”_self”>first time home buyerwith no real hassles

From credit scores to down payments to paperwork, there’s a lot you can do now to prepare for the home buying adventure ahead of you

Let’s take a look at 5 steps you can take now so you can become a credit score

If you want to become a first time home buyer in 2013, you need to get any debt under control

  • Gather paperwork

    As you’ve probably heard, paperwork is the backbone of the home buying process

    Income verification, tax forms, and bank statements

    The more prepared you are now, the easier it will be to gather the necessary documents

  • Understand your credit history

    A mortgage consultant will pull your credit report from the 3 main credit reporting agencies – Experian, TransUnion and Equifax – and use the middle score (known as a tri-merge credit report)

    Knowing what’s on your credit report can help ensure that you’re doing the right things when it comes to your credit

    Make sure no outstanding issues are on there, and ask your mortgage consultant what needs to be addressed if some issues do arise

  • Research

    Begin the research phase now and start exploring first time home buyer loan options

    Are you considering a mortgage pre-approval is vital in the home buying process

    Step one should not be house hunting and dreaming of the perfect home

      This will help you gear your house hunting to homes you can afford

     

    Here at Delaware Financial Capital Corp, we can answer your questions about your mortgage needs

      Just give us a call at (302) 266-9500 or click on the button below and fill out our online contact form

     

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    Download your FREE Report!  Click the button below:

     

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  • 6 Questions Delawareans Should Ask Before Refinancing!

    de.aware, refinance, credit score, interest ratesWondering if refinancing your mortgage is something you should look into? That answer depends on what you want to get out of it.

    Refinancing, or paying off your existing mortgage with a new one, could be worth it when it saves you money. And with interest rates near historic lows according to the Mortgage Bankers Association – it very well could help you save.

    However, just because rates are low, doesn’t mean that refinancing is the right option for everyone.

    In fact, refinancing costs and rates vary on a case-by-case basis.

    Below is a list of questions you can ask yourself to help you make a decision if refinancing is right for you.

    Question #1 – Will I get a lower interest rate if I refinance?

    It only makes sense to refinance if the new mortgage is going to be better for you financially, right? Then, the first place to look is the interest rate, which is a good indicator of how much you could be saving.

    Talk to one of our loan specialists here at Delaware Financial Capital Corp to find out if – and by how much – you might be able to lower your interest rate by refinancing. But keep in mind, the interest rate is just one piece of the puzzle. Sometimes a low interest rate might come with high fees.

    Question #2 – How good is my credit score?

    Why should you care about your credit score when it comes to refinancing your mortgage?

    Here’s one reason: Lenders may use it to decide whether or not you are a good risk for a home mortgage.

    So what’s a good score? Well, FICO credit scores – can range from 300 to 850.

    And the higher the score, the better.

    If your credit score isn’t where is should be, don’t worry. There are a few things you can do to help improve your score, like paying your bills on time and paying down your credit card balances.

    Question #3 – Can I afford the refinancing costs?

    If you’re currently paying 6% interest on your mortgage right now, it might feel like a no-brainer to try and refinance to a 3.5 % interest loan. But before you sign off on that new loan, you need to know how much refinancing will cost you.

    Question #4 – How long do I plan on staying in this home?

    This is one of the more important questions to ask yourself, because if you are planning to move within one or two years, refinancing might not be worthwhile for you.

    Question #5- How stable is my employment?

    One of the things lenders look at when determining whether or not they’ll approve you for a loan is the stability of your employment.

    Does that mean you won’t qualify for a loan if you’ve had more than 1 job? Not necessarily, but you do need continuous employment. Lenders want to make sure you’ll have a job two months from now.

    Question #6 – Can you put those big purchases on hold for a while?

    If you’re considering refinancing, ask yourself if you can put other big purchases on hold for a while. If you can’t refinancing may not be in your best interest.

    Don’t take out new debt at the same time you’re trying to get a refinance. Some borrowers think that the lender will see I just got a new car, so of course they’ll give me money – but in truth the lender worries if you have a new car (and new car payments) how will you pay the mortgage?

    And while it’s okay to have some debt – like student loans or car payments – it’s important to make sure that you can manage all of your payments comfortably, including refinancing costs and monthly payments.

    Finally, if you’ve already applied for a refinance, don’t take on new debt until the deal has closed.

    How do you know whether or not you qualify?  Simply, you won’t know unless you ask.  If this whole topic seems a little confusing, please do not hesitate to give us a call at 302-266-6500 to see if you may qualify for a lower rate and a refinance.

     

     

    Questions? Contact our Mortgage Speciali

    Could A Mortgage Pre-Approval Hurt Your Credit Score?

    delaware, pre-approval, credit score, mortgageIn the aftermath of the global recession, it is more important than ever to keep track of your credit score.  Banks are more careful about extending credit, making a good credit score the foundation of major purchases like a new car or a first home.  Frequent credit inquiries may negatively impact your credit score.  A single inquiry linked to a request for credit can impact your score by as much as five points.  Subsequent inquiries can also impact your score.  Since home buyers need a good credit score to qualify for a mortgage, searching for a mortgage pre-approval can be nerve-wracking. 

    How many inquiries are too many?  How long do inquiries affect your score?  Is a pre-approval on a mortgage loan worth the possible repercussions to your credit score?

    Not All Inquiries Impact Your Score

    Before deciding not to go for a mortgage pre-approval, you should know which types of inquiries actually affect your score.  “Soft” inquiries, or those that don’t come with a loan or credit offer attached, don’t affect your credit score at all.  Employers use soft inquiries to help make determinations about hiring, and you might make such an inquiry to look at your current score. 

    “Hard” credit inquiries usually follow a request for credit.  Additional lines of credit or added monthly expenses affect a consumers ability to repay debts, which is why hard credit inquiries affect credit scores.  Loan pre-approvals can fall under a special rule.  Lenders and credit analysts understand the importance of rate shopping on a large purchase.  If you have various lenders all make their inquiries within a two week time span, all of those inquiries are lumped together and only counted negatively, once.  This allows you to apply for pre-approval from several lenders, without worrying about the impact on your credit score.

    Should You Get a Pre-Approval?

    Home buying for the first time is stressful, but well worth it.  Owning your own home is a great investment.  Finding the right home can take time, but closing on the property doesn’t have to.  Mortgage pre-approval helps you get everything lined up, so closing on your new home can take place in just a few weeks, rather than dragging on for months.  Repeated inquiries can negatively impact your credit score, but having a lender pre-selected and on-board saves you from last minute hassles and failed closings.

    Now you know that you can shop around a bit during the pre-approval process.Find the best rate and the best service. Doing so will not hurt your credit score. However, be sure not to go looking for other lines of credit during this time. Getting store credit, an auto loan and credit cards will hurt your credit.

    So if you’re considering buying a house, it’s time to get your mortgage pre-approval underway.  See if you’re pre-approved with Delaware Financial Capital Corp call us at 302-266-9500 or click the button below to begin the process of getting pre-approved. 

     

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    What documentation is needed to obtain a mortgage?

    mortgage pre-approval

    Getting a pre-approval before the buying process can be beneficial for several reasons

    For one, it can give you an idea of how much you can afford when you are looking for a home

    When you have found the right home, one of our mortgages consultants will let you know what you need to do next

    First, you will fill out an application and provide details like your work history, social security number and previous addresses

    Our mortgage consultants here at Delaware Financial Capital Corp

    will also pull a credit report

    This helps to make a determination on whether you qualify for a mortgage

    Along with your application, you will be required to provide additional

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    aspx” title=”documentation,” target=”_self”>documentation, which one of our mortgage consultants will go over with you

    Often times this is required for those borrowers who are self-employed or receive non-employment income

    If either applies to you, you will be asked to provide tax returns and any other tax forms like a 1099

     

    At Delaware Financial Capital Corp here in Newark, DE, we are committed to help you through your entire mortgage process

      To speak to one of our mortgage consultants today, please call 302-266-9500 or click on the link below and get started!

     

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    How Mortgage Loans Work

    How Mortgage Loans WorkExcluding property taxes and insurance, a traditional fixed-rate mortgage payment consist of two parts: (1) interest on the loan and (2) payment towards the principal, or unpaid balance of the loan.

    Many people are surprised to learn, however, that the amount you pay towards interest and principal varies dramatically over time. This is because mortgage loans work in such a way that the early payments are primarily in interest, and the later payments are primarily towards the principal.

    In the beginning . . . you pay interest
    To help calculate monthly payments for loans based on different interest rates, lenders long ago developed what are known as “amortization tables.” These tables also make it fairly easy to calculate how much money of each payment is interest, and how much goes towards the principal balance.

    For example, let’s calculate the principle and interest for the very first monthly payment of a 30-year, $100,000 mortgage loan at 7.5 percent interest. According to the amortization tables, the monthly payment on this loan is fixed at $699.21.

    The first step is to calculate the annual interest by multiplying $100,000 x .075 (7.5 %). This equals $7,500, which we then divide by 12 (for the number of months in a year), which equals $625.

    If you subtract $625 from the monthly payment of $699.21, we see that:

    • $625 of the first payment is interest
    • $74.21 of the first payment goes towards the principal

    Next, if we subtract $74.21 (the first principal payment) from the $100,000 of the loan, we come up with a new unpaid principal balance of $99,925.79. To determine the next month’s principal and interest payments, we just repeat the steps already described.

    Thus, we now multiply the new principal balance (99,925.79) times the interest rate (7.5%) to get an annual interest payment of $7,494.43. Divided by 12, this equals $624.54. So during the second month’s payment:

    • $624.54 is interest
    • $74.67 goes towards the principal.

    Equity
    As you can see from the above example, even though you pay a lot of interest up front, you’re also slowly paying down the overall debt. This is known as building equity. Thus, even if you sell a house before the loan is paid in full, you only have to pay off the unpaid principal balance–the difference between the sales price and the unpaid principle is your equity.

    In order to build equity faster–as well as save money on interest payments–some homeowners choose loans with faster repayment schedules (such as a 15-year loan).

    Time versus savings
    To help illustrate how this works, consider our previous example of a $100,000 loan at 7.5 percent interest. The monthly payment is around $700, which over 30 years adds up to $252,000. In other words, over the life of the loan you would pay $152,000 just in interest.

    With the aggressive repayment schedule of a 15-year loan, however, the monthly payment jumps to $927-for a total of $166,860 over the life of the loan. Obviously, the monthly payments are more than they would be for a 30-year mortgage, but over the life of the loan you would save more than $85,000 in interest.

    Bear in mind that shorter term loans are not the right answer for everyone, so make sure to ask your us about what loan makes the best sense for your individual situation. 

    Give Delaware Financial Capital Corp. a call at 302-266-9500 or simply click on the button below and fill out our online form

     

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    Will Your Credit Score Affect the Interest Rate You Get?

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      I asked if he have any idea what his credit score was

      He said he went on line and it was 900+

      I advised him that that score was impossible because credit scores range from 300 to 850

    The credit scoring mechanism used by mortgage lenders is called a FICO score

     This credit scoring pulls its scores from three different credit bureaus,

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    Qualifying for a mortgage loan!

    Good credit is important for qualifying for a mortgage loan

    If you do not know your credit score you can find out the numbers from

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    com” title=”Experian” target=”_self”>Experian and Qualifying for a mortgage loan means that you have to shop around, do your research, compare different mortgage loans and apply for what suits you best

    You have to look at the interest rates, the down payment amount that you will pay, the points and many other factors

    Qualifying for a mortgage loan is not that hard once you do the necessary research you will find that it is a fiscally better option as opposed to renting in the long run

    Factor in the taxes you will pay for your new home, insurance, the maintenance and other related expenses when calculating what kind of mortgage loan that you qualify for and the home you would like

     

    Our mortgage consultants here at Delaware Financial Capital Corp are here to answer your questions

      Give us a call at 302-266-9500

     

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    Deciding if a mortgage refinance is right for you

     


     
    Interest rates home mortgage loans are expected to end 2012 at a very low rate. If you’re considering refinancing your mortgage to save money, you have some time, but the deals won’t last forever. Here’s a checklist to run through to determine if it’s the right time to consider refinancing.1) What shape is your credit in?The best rates and the lowest fees go to those with great credit scores. It’s worth pulling your FICO score and credit reports before you shop around to see what your credit scores are. The official site to receive a free credit report is http://www.annualcreditreport.com.

     2) How much is your home worth, and how much do you owe?

    Get a list of comparable recent sales in your area. If you’re underwater, meaning the current market value of your home is less than the value of the current loan, you’re unlikely to get an attractive refinancing offer.  If your loan is smaller — $100,000 or less — you’re unlikely to save much money by refinancing.

     
    3) Are you selling soon?“It normally takes over 10 years to make your money back when paying a lot of points and fees” on a new mortgage, says Fred Arnold, public relations chair of the National Association of Mortgage Brokers. “Paying points” means you give the bank money up front in exchange for a lower interest rate, something you shouldn’t have to do in today’s record-low climate. Nonetheless, the fees on a refinancing, known as closing costs, can still run to thousands of dollars. Your savings on monthly interest cost may not offset the closing costs if you sell the home and buy a new one within a couple of years.4) Are you willing to drive a hard bargain?“Everything’s negotiable, especially if you shop the loan around,” says Arnold. Available rates change often, even multiple times a day, so it makes sense to get several quotes. At the same time, changes to federal rules in the wake of the housing crisis may have made it harder to get the best deal. For example, the government mandates that a broker offer the same rates for borrowers in similar financial situations to crack down on predatory lending, but Arnold says that has made lenders leery of waiving any fees.When shopping for home loans, ask for a fees worksheet, which should give you a rough idea of the closing costs. You are within your rights to ask for a receipt for any fee for a third-party service, such as an appraisal, notarizing document, or preparing your credit report — this may lower the fees.Another way to lower your closing costs is to pay what’s called a ” yield spread premium.” This is the reverse of paying points. It means you get a slightly higher rate, the bank pays the broker, and the broker charges you less for the loan — or even nothing, called a “no closing cost loan.” Taking this kind of deal may make sense if you think you might have to sell sooner than 10 years out, and if the higher rate is still lower than you’re paying now. “We talk about the rule of 2 percent,” says Arnold. “Your rate should go down at least 2 points to make that refinancing worth it.”
    When you look at your monthly payment, remember the mortgage interest tax deduction. If you take out a new loan with a lower rate, you’ll pay less interest. Therefore there will be less to deduct.It’s a great time to refinance a mortgage, but that doesn’t mean it makes sense — or even is possible — for every borrower. Deciding if it’s right for you requires taking a hard look at the costs and benefits.

    What is a credit score all about?

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      Your credit score is a numerical value that reflects how well you’ve managed your credit over the last seven to 10 years

    Lenders and mortgage underwriters use your score to help them decide how risky you are as a borrower

    When lenders extend credit, their primary concern is that you’re capable and willing to repay the debt

    They typically look at several factors to make this determination, including income, employment history, existing debt level, and credit score

    Your income and debt levels tell lenders how much discretionary income you have and which is  major factor to determine if you have enough money to pay your mortgage

      Your employment history helps indicate how stable you are financially

     In other words are skipping from job to job every month or so

      Your credit score provides your ability to manage your  spending and your repayment habits

    Lenders use these factors to decide two things-whether or not to extend you credit, and the rate of interest to charge if a credit offer is made

    The better your score, the better your rate and the lower your credit score, the higher will be your rate

    It stands to reason that riskier borrowers pay higher interest rates

    That’s why understanding and managing your credit score is so important-because making prudent choices and managing it can literally save you tens of thousands of dollars over your lifetime

    What is FICO?

    FICO scores, developed by Fair Isaac Corporation, are the most commonly used credit scores

    Your FICO score is calculated (by way of highly confidential algorithms) from the information contained in your consumer credit report

    The FICO scale ranges from 300 to 850, with a higher number meaning less risk for the lender

    There are no set levels defining a good or bad score; this determination varies by lender based on its underwriting practices

    Generally speaking, a FICO score of 750 or above indicates good credit management skills, while one below 650 is in need of improvement

    Wikipedia defines credit scores, “a credit score is a number based on a statistical analysis of a person’s credit files, that in theory represents the creditworthiness of that person, which is the likelihood that people will pay their bills

    A credit score is primarily based on credit report information, typically from one of the three major credit bureaus: Experian, Trans Union, and Equifax

    Income is not considered by the major credit bureaus when calculating a credit score

    Your credit score for pricing is the middle score of the three (3) bureaus;

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    Do you know what your credit score is today?  Knowing your score and knowing what the credit bureaus are reporting, is an important step to becoming a homeowner

    We’re helping Delawareans purchase and refinance their homes everyday! 

    Give us a call at 302-266-9500 or

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    Buying a Home – Top Ten Mistakes

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    For most people buying their first home is the largest  investment they will ever make. However, few people do the research necessary to make a good buying decision. The home purchase process is extremely confusing for most people. With a little bit of homework and with advice from family and friends who have been through the process before, you can make this a little easier on yourself. There is no substitute for taking time to educate yourself before you buy a house — which typically costs you 25% to 40% of your gross income!

    Buying a house

    1.    Looking for a house without getting pre-approved.

    Do not confuse a pre-approval with a pre-qualification. During the pre-qualification process a loan officer asks you a few questions and hands you a pre-qualifying letter. The pre-approval process is much more complete.

    During a pre-approval the mortgage company does all the work of a full-approval, except for the appraisal and title search. When you are pre-approved — you become like a CASH BUYER and have more negotiating clout with the seller. In some cases (especially in multiple offer situations), having pre-approval can make the difference between buying a home and not buying a home. In other instances home buyers have been able to save thousands of dollars as a result of being in a better negotiating situation.

    Most good Realtors will not show you homes before being pre-approved because they do not want to waste your time, their time, and the seller’s time. Many mortgage companies will pre-approve you at little or no cost. They typically will need to check your credit and verify your income and assets.

    2.    Making verbal agreements!

    If an agent makes you sign a written document that is contrary to their verbal commitments — don’t do it! Example: the agent says that the washer will come with the house, but the contract says that it will not — the written contract will override the verbal contract. In fact, written contracts almost always override verbal contracts. Buying house a is a very complex process — but it’s a lot easier when everything is in writing.

    3.    Choosing a lender just because they have the lowest rate. Not getting a written good faith estimate.

    While rate is important, you have to look at the overall cost of your loan. This includes looking at the APR, the loan fees, as well as the discount and origination points. Some lenders add origination points into their quoted points while other lenders add an origination point in addition to their quoted points. So when one lenders says 2 points they mean 2 points, whereas another lender means 2 points plus 1 origination point.

    The cost of the mortgage, however, cannot be your only criteria. There is no substitute to asking family and friends for referrals and interviewing prospective mortgage companies. You must also feel comfortable that the loan officer you are dealing with is committed to your best interests and will deliver what they promise. Often the company that has the absolute lowest quoted rate may not be the best company for your mortgage business.

    4.    Choosing a lender just because they are recommended by your Realtor.

    Your Realtor is not a financial expert. They may not know what’s the best loan for you. The Realtor only gets a commission when your house closes. As a result the Realtor may refer you to a lender that is sure to close the loan, but not necessarily the lender that has favorable rates or fees. Also many Realtors refer you to their friends in the loan business — who again may not be able to get the best loan for you. Even if the Realtor is very professional and looking out for your best interest, you should still do your homework.

    We recommend shopping for a loan with at least 3 mortgage companies before you make a decision. There are countless stories of consumers who wound up paying higher rates or getting a loan program that was not right for them, because they blindly followed their Realtor’s advice.

    5.    Not getting a rate lock in writing.

    When a mortgage company tells you they have locked your rate, get a written statement which details the interest rate, the length of the rate lock, and details about the program.

    6.    Using a dual agent i.e. an agent who represents the buyer and the seller on the same transaction.

    Buyers and sellers have opposing interests. A dual agent in most normal situations cannot be fair to both the buyer and seller. Most dual agents represent the sellers more strongly than they do the buyer. If you are a buyer, it is much better to have your own agent who will be on your side. The only time you should even consider a dual agent is when you get a price break from using a dual agent. If that is the case, then tread carefully and do your homework!

    7.    Buying a house without a professional inspection. Taking the sellers word that they have made repairs.

    Unless you are buying a new house where you have warranties on most equipment, it is highly recommended that you get a property inspection, a roof inspection and a termite inspection. This way you will know what you are buying. Inspection reports are great negotiating tools when it comes to asking the seller to make repairs. If a professional home inspector states that certain repairs be done, the seller is more likely to agree to do them.

    If the seller agrees to do the repairs, have your inspector verify that they are done prior to close of escrow. Do not assume that everything has been done the way it was promised.

    8.    Not shopping for home insurance until you are ready to close.

    Start shopping for insurance as soon as you have an accepted offer. Many buyers wait until the last minute to get insurance and do not have time to shop around.

    9.    Signing documents without reading them.

    Do not sign documents in a hurry. Whenever possible try to get documents that you will be signing ahead of time so you can review them. It is advisable to ask for a copy of all loan papers you are signing a few days ahead of the close of escrow. This way you can review them and get your questions answered. Do not expect to read all the documents during the closing. There is rarely enough time to do that.

    10.    Making your moving plans too tight.

    Example: you expect to move out of your prior residence on a Friday and into your new residence over the weekend. So you give notice to your landlord to end your lease on a Friday and arrange for movers to come to your house on Friday. Then, your loan closing gets delayed until the next Tuesday. You now may be homeless! New tenants could be moving into your apartment, and the movers are going to charge you for wasting their time. You could be forced to live in a motel for a couple of days!

    A Better Plan:

    Allow for a 5-7 day overlap between closing and moving. In the long run it is not nearly as expensive, and it will sure give you peace of mind. 

     

    If you have any questions about the 10 Ten List of Mistakes homebuyers make when purchasing a home,  contact Sam at (302)266-9500 or simply click the button below and complete our online contact form. 

     

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