Financial Tips

Tips for Improving Your FICO Score

Like it or not, your ability to get a good home loan is highly dependent on your FICO score. And, many people don't realize that a good FICO score has nothing to do with how much money you have. It is a measure of how well you handle credit and pay back those companies you borrow money from.

I once knew a very well-off young couple. They were newly married and ready to buy a home, but their FICO score was in the basement. Why? Because they had always paid cash for everything and never used any credit cards or loans. After spending a year building a credit history, they finally got a good FICO score, a good loan, and a lovely first home.

There are lots of great tips to improving your credit score, and everyone's needs are different. If you need to improve your FICO score, please give me a call and I will recommend several reliable mortgage brokers who know a lot about improving your credit profile.

But, in the meantime, here are several great tips that should apply to most people:

1. Get a copy of your credit report from all three credit bureaus and review it for accuracy. It is estimated that 60-70% of credit reports contain inaccuracies.

2. Pay your credit cards on time, every month, even if it is the minimum payment. Lenders are looking for a strong history of paying your debts in a timely manner.

3. Use your credit cards to build a profile, but don't max them out. Most advisors recommmend using just 25-40% of your credit limit. Lenders are looking for responsible use of credit.

4. Be patient. It can take 6-12 months to see a strong improvement in your credit score.

For a more complete look at your FICO score, visit the Fair Isaac MyFico.com website. And, feel free to contact me anytime to discuss FICO scores and lending. I can be reached at 510-547-5970 x57 or MSmartt@jps.net

(photo courtesy of MyFico.com)

Financing Tips

Last time on the topic of Financing Tips, I wrote about MMAP--the Monthly Mortgage Assistance Program. Today, I wanted to visit Home Equity Sharing, which Traci Hukill wrote an excellent article about in yesterday's San Francisco Chronicle Magazine.

As we are starting to see, it is becoming a "buyer's market" in many East Bay neighborhoods these days, so people interested in getting into real estate should seriously considering getting their financial ducks in a row in the next few months. One obstacle to this can be the daunting prospect of coming up with the down payment, so home equity sharing is a creative and sound solution to consider.

Home equity sharing is basically finding a private individual investor to cover the down payment in exchange for an equity percentage in the home. The particulars are up to the involved parties, who will need to agree upon the percentage of equity, the time of the agreement and more. Typically, the homeowners pay back the investor in 3-5 years and then refinance on their own.

The easiest way to do this might be to make an agreement with a friend or family member, but there are also matching services out there, such as HomeEquityShare.com, which can connect you with investors.

Of course, like with any financial deal, there could be some risks, so be sure to discuss all the angles with your financial advisor or mortgage broker.

If you would like more information on home equity sharing or would like to further discuss financing options for first-time home buyers, please let me know. I can be reached at 510-547-5970 x57 or MSmartt@jps.net

Financing Tips

GET OUT THE MMAP!

One of the biggest hurdles that the average person faces when purchasing a home is how to finance such a large amount of money. Buying something for hundreds of thousands of dollars just seems unfathomable at first to most people. And, it makes the new iPhone look cheap! So, besides standard mortgages (or those dangerous sub-prime loans), what is the home buyer to do?

Well, there are many sound, creative solutions, and one of my favorites is the MMAP program.

MMAP stands for Monthly Mortgage Assistance Program, and it can help reduce your payments from $250 to $1000 per month for up to two years. And, all it requires is a simple agreement between the buyer and the seller.

Basically, the seller agrees to set aside an agreed-upon amount of the purchase price into a trust account (via the MMAP grant program), which is then used to reduce the buyer's monthly mortgage payments anywhere from $250 to $1000 per month for up to 24 months.

Even better, it is reliable and astoundingly simple to arrange. For more information, visit the MMAP website or just ask me. I've had special training to certify me to represent buyers and sellers in the MMAP program.

Have a great weekend!