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Home Buying Seminar
What is credit?
Why do you need good credit? Improves your ability to
◦Get a job◦Borrow◦Secure lower rates◦Purchase a home◦Rent◦Get lower rates
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Credit
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No credit history? Blemished history? Open a small credit line Apply for a fully secured loan Get a co-signer
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Getting Credit
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Shop around for credit Ask if account is reported to a credit bureau Make payments on time Read the credit agreement before signing Balance should be lower than 50% of
available credit
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Tips
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Review credit report once a year Treat credit cards like cash Set up a budget and stick to it
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Tips
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Account payment information Delinquencies, charge-offs, liens,
judgments, bankruptcy Severity of delinquency Amounts past due Recent past due accounts Number of past due accounts Number of accounts paid as agreed
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Payment History - 35%
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Number of accounts with recently reported balances
Average balance across all trade lines Relationship between total balances and
total credit limits on revolving trade lines
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Amounts Owed - 30%
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When accounts were established When specific credit accounts were
established How long accounts have been used
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Length of Credit History - 15%
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Number of recently opened accounts Number of recent credit inquiries Length of time between account openings,
by type account Length of time between credit inquiry(ies)
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New Credit - 10%
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Number of account types◦ Credit cards◦ Retail accounts◦ Installment loans◦ Mortgage ◦ Consumer finance accounts
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Types of Credit Used - 10%
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Payment history: Pay your bills on time Get current and stay current If you are having trouble, contact your
creditors or a credit counselorBe aware – collections, even if paid, stay on
your report for 7 years
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Tips to Raise Your Score
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Outstanding debt: Keep balances low Payoff debt - don't balance transfer Don’t close unused credit cards to raise
your score Don’t open new cards to increase your
available credit
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Tips to Raise Your Score
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Credit history: Don’t open new accounts rapidly Keep the card you’ve had the longest time
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Tips to Raise Your Score
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Inquiries and new account openings: Rate shop for a loan within a 30 day period Re-establish your credit history if you have
had problems Check your own credit report and scores at
least once a year
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Tips to Raise Your Score
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Types of credit in use: Open new credit accounts only as needed Have credit cards, but manage them
responsibly
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Tips to Raise Your Score
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Annualcreditreport.com877-322-8228
Experian Consumer Relations701 Experian Parkway/ POB 2002Allen, TX. 75013-0036888-397-3742www.experian.com
Equifax Consumer RelationsP O Box 105496Atlanta, GA. 30348888-532-0179www.equifax.com
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Important Numbers
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TransUnion Consumer RelationsP O Box 2000Chester, PA 19022800-888-4213www.transunion.com
Federal Trade Commissionwww.ftc.com202-326-3761
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Important Numbers
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Are you sure you want to buy a house?Do you have steady income and steady
employment?Do you anticipate remaining in the same
location for the next several years?Have you created a budget so you know
how much you can realistically afford to pay for housing?
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Ask Yourself
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Do you have established credit?Can you build a non-traditional credit
history with records of payments to landlords and utility companies?
Do you have enough money saved up for a down payment and closing costs?
Have you “pre-qualified” yourself?
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Ask Yourself
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Have you been pre-qualified by a lender, real estate professional, or counselor to determine how much you can borrow based on existing income and debt?
Is your existing debt low enough to qualify for a mortgage?
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Ask Yourself
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Have you looked into the benefits and requirements of mortgages available to home buyers of your income level?
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Ask Yourself
Place of your own Feeling of permanence Financial incentives
◦ Insurance bundling ◦ Equity?
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Advantages of Homeownership
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Build equity — your wealth will increase as you gain more home equity
Gain tax advantages — mortgage interest is tax deductible as per IRS code
Stabilize your payments — monthly payments are relatively steady if your loan has a fixed interest rate, while your landlord can increase the rent
Have a secure place for your family to live — a home provides a permanent place where your family can live and grow, and you can decorate or expand a house the way you like to create your dream home
Gain a sense of community — homeowners often are more involved in the well-being of their communities; many homeowners work together for better schools and less crime
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Pros of owning
Maintenance costs — it takes work and money to keep a home in good condition
Ties up your cash — selling the house may not be possible during the first few years of ownership; moving is more difficult and complicated and you may not have as much flexibility in choosing a new job location
Can fluctuate in value — there is no guarantee that your home will increase in value; it could decrease in value
Obligates your finances — when you buy a home, you are obligated to a set monthly payment
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Cons of Owning
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11 Tips On Being A Smart Home Purchaser
1. Attend a homeownership education course
2. Interview agents and ask for and check references before you select one
3. Get information about the prices of other homes in the neighborhood
4. Hire a properly qualified and licensed home inspector
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5. Shop for a lender and compare costs
6. Do NOT let anyone persuade you to make a false statement on your loan application. Lying on a mortgage application is fraud and may result in criminal penalties.
7. Do NOT let anyone convince you to borrow more money than you know you can afford to repay.
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11 Tips On Being A Smart Home Purchaser
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8. Never sign a blank document or a document containing blanks
9. Read everything carefully and ask questions. Do not sign anything that you don't understand.
10. Be suspicious when the cost of a home improvement goes up if you don't accept the contractor's financing.
11. Be honest about your intention to occupy the house.
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11 Tips On Being A Smart Home Purchaser
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Ruth López NMLS # 639376 Karla Patiño NMLS # 495186
Sr. Mortgage Loan Officer Mortgage Loan Officer 12020 Rojas 6610 Continental El Paso, TX 79936 El Paso TX 79925 915-926-2587 915-926-2257 915-926-2630 Fax 915-926-2630 Fax [email protected] [email protected]
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Questions
