Kim Daneault
KELLER WILLIAMS REALTY / Metropolitan | 603-345-7783 | kim-d@kw.com


Posted by Kim Daneault on 12/3/2017

What do buying a house, opening a credit card, and getting approved for an auto loan have in common? They all depend on your credit score.

Building credit is a multifaceted undertaking. In a way, this is a good thing--you wouldn’t want lenders to base their opinions solely on one aspect of your financial history. The downside is that understanding just what makes up your credit score can be difficult.

To complicate matters further, there isn’t one standard method for scoring your credit, and different credit bureaus each use their own criteria.

In this article, we’re going to talk about some of the factors the major credit bureaus use to calculate your credit, and give you some ways you can boost your credit.

But first, let’s talk about some of the implications of having a good credit score.

Why credit matters

Typical credit scores range anywhere from 250 to 850. The three main reporting agencies (Equifax, TransUnion, and Experian). Most lenders use a combination of those scores that is reported by FICO.

Most credit reports will rank your category from “bad” to “excellent.” Here’s an example of what a credit ranking might look like:

  • Excellent: 750+

  • Good: 700 - 749

  • Fair: 650 - 659

  • Poor: 550 - 649

  • Bad: -550

U.S. legislation makes it possible for Americans to receive a free report of their credit score and to challenge and correct the score if it contains inaccuracies.

If you’re thinking about buying a house, opening a new line of credit, or taking out a loan of some kind, then the provider will likely run your credit score. Those providers are going to want to see a return on their investment, so they’ll charge interest.

If you have a high credit score, it tells the lenders that you are a low-risk investment, and therefore they can offer you a lower interest rate, saving you money in the long run.

Components of a credit score

There are five main factors that credit bureaus take into consideration when formulating your credit score. Not all of the factors are treated equally. Your ability to pay your bills on time, for example, is considered to be more important than the types of bills you have. Here’s a breakdown of the five components that make up a credit score:

  • 35% - Bill and loan payments

  • 30% - Current total amount of debt

  • 15% - Amount of time you’ve had credit (since you took out your first loan or opened your first credit card)

  • 10% - Types of credit (cards, loans, etc.)

  • 10 % - New credit inquiries

Quick tips for building credit

It takes time to build credit and improve your score. So, if you’re hoping to buy a home within the next few years, now is the time to start working on your credit. Here are some best practices for building credit:

  • Set up autopay for your bills to avoid late payments. Even if the service doesn’t offer autopay, you can likely set up recurring payments through your bank.

  • Settle outstanding debt. Avoiding debt that you can’t pay off will only hurt you more in the long run. Call your creditor and see if they offer debt relief programs. More likely than not they’d rather work with you to ensure they receive some repayment rather than none at all.

  • Start budgeting the right way. New budgeting software like Mint and “You Need a Budget” are easy to use and link up with your accounts. They’ll help you monitor your spending and start paying off debt.

  • Don’t open new lines of credit close to when you want to take out a loan. New credit inquiries can briefly lower your credit, especially if you make more than one. Viewing your free credit reports doesn’t count as an inquiry, so feel free to do that as often as needed to check your progress.

  • Get credit for bills you’re already paying. You can report your monthly rent payments, switch bills into your name that you contribute to, or take out a credit builder loan. All three will help you build rent without changing your spending habits.





Posted by Kim Daneault on 7/9/2017

Getting a mortgage is one of those things that everyone seems to have quite a bit of advice about. While people surely have good intentions, it’s not always best to take the buying advice of everyone you meet. Below, you’ll find the wrong kind of mortgage advice and why you should think twice about it. 


Pre-Approvals Are Pointless


Getting pre-approved for a mortgage can give you an upper hand when it comes to putting in offers on a home. Even though a pre-approval isn’t a guarantee, it’s a good step. It shows that you’re a serious buyer and locks you in with a lender so they can process your paperwork a bit more quickly when you do want to put an offer in on a home. 


Use Your Own Bank


While your own bank may be a good place to start when it comes to buying a home, you don’t need to get your mortgage from the place where you already have an account. You need to compare rates at different banks to make sure you’re getting the best possible deal on a mortgage. You’ll also want to check on the mortgage requirements for each bank. Different banks have different standards based on down payment, credit scores and more. You’ll want to get your mortgage from the bank that’s right for you and your own situation. 


The Lowest Interest Rate Is Best


While this could be true, it’s not set in stone. A bank with a slightly higher interest rate could offer you some benefits that you otherwise might not have. If you have a lower credit score, or less downpayment money, a bank offering a higher interest rate could be a better option for you. Low interest rates can have some fine print that might end up costing you a lot more in the long term. Do your research before you sign on with any kind of bank for your mortgage. 


Borrow The Maximum


Just because you’re approved for a certain amount of mortgage doesn’t mean that you need to max out your budget. It’s always best to have a bit of a financial cushion for yourself to keep your budget from being extremely tight. When life throws you a curveball like unexpected medical bills or a job loss, you’ll be glad that you didn’t strain your budget to the end of your means. Even though the bigger, nicer house always looks more attractive, you’re better off financially if you’re sensible about the amount of money you borrow to buy a home.




Tags: Mortgage   mortgage rates   bank  
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Posted by Kim Daneault on 9/18/2016

When you’re shopping for a home, there’s so much to consider. Between the questions of what neighborhood you should live in and what style house you like, you need to think of the most important thing: finances. When you think that you’re financially ready to buy a home, you often will get the notion that it’s a good time to just start shopping. There’s several steps that you must take first before you start shopping for a home. One of the first steps you should consider taking before you make the leap into home ownership is to get preapproved. While buyers still tend to skip the preapproval process, doing this can help you immensely throughout the home buying process. While it may seem an insignificant and kind of boring step, getting preapproved is important for your finances. It may even help you to land in a home that you love faster. It’s actually detrimental to make an offer without a preapproval, because some lenders won’t accept an offer without one. Many realtors verify and require that offers come along with the stamp of preapproval. What Does Getting Preapproved Involve? You may have heard of a prequalification. This is much different from being preapproved. Prequalification involves buyer provided information, just to get a sense of how much they can spend on a home. Preapproval involves credit scores, bank statements, tax returns and more. This process states exactly how much lenders will be willing to give to the borrower. All of the documents needed for preapproval are the same exact documents needed for a mortgage. This helps you as the borrower prepare ahead of time as well. These are some of the kinds of documents that you’ll need for preapproval: Pay stubs W-2s from the previous year Federal tax returns from the past two years Two Months of Bank Statements from all of your accounts A credit report While a preapproval is only one step in the long process of buying a home, it speeds up the later steps of securing a mortgage. The process also helps buyers face their financial reality. Don’t put off the important process because you fear that you won’t be approved for the amount that you need. It’s also common for buyers to assume that because someone they know has been approved for a certain amount of money that they will be able to get that same loan amount as well. This isn’t always the case and another great reason to get preapproved. Errors On Credit Reports Often, there are errors on credit reports. That’s why you need to check them often. If you have some errors on your credit report, getting preapproved is a great way to check if there are any errors and give you time to fix them before you apply for a mortgage.




Categories: Uncategorized  


Posted by Kim Daneault on 8/2/2015

Paying off your mortgage early and having no bills sounds like a no brainer. The answer however is not so simple. The answer really is; it depends. First you need to ask yourself a few questions. 1. Have you capitalized your employer’s match to your retirement savings? If the answer is no and you are not contributing the maximum than you are throwing away free money. You may want to consider putting your money here before paying down your mortgage. 2. Do you have other debt other than your mortgage? Pay off high interest credit card debit first. It makes no sense to pay off a lower interest loan and carry high interest debt. 3. Do you have an emergency fund? Experts suggest at least a three month supply of living expenses. Some even go as much as twenty four months of living expenses after the turn in the economy and job market. It makes more sense to have money set aside for a sudden loss of income before you pay off your mortgage. 4. Do you owe more than your house is worth? If you are upside down you are more susceptible to foreclosure. Ask yourself how much how much you enjoy living there. Would you be willing to buy it again for more than it is worth now? 5. Do you have life, health and disability insurance? If you are the main source of income in your household what would happen if you were no longer able to make the payments? Putting safety nets in place first is a wise idea. 6. Do you believe you can get better return investing elsewhere? Paying off your mortgage is an investment decision. Ask how does paying off my mortgage stack up with other investment options? 7. Are you thinking of retiring and want to live with the worry of a payment? The thought of living on a fixed income can be scary. Paying off your mortgage may give you peace of mind. There is no right or wrong answer to this question. It really comes down to what is most important to you. Sometimes, the answer is not based just on dollars and sense and more on what works for you, your life, your family situation and just plain old personal preference.







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