17 Nov 2020
By Kevin Gahagan

A Late Payment: Credit Score Impact

Mortgage

A Late Payment: Credit Sore ImpactThis has been a difficult year for everyone. There are a lot of people who are worried that they might not be able to keep up with their mortgage payments. Small businesses have had to close their doors and numerous individuals have been laid off from work.

It is important for homeowners to understand that banks do not want people to foreclose on their homes either. Therefore, they are often willing to work out an alternate payment plan with homeowners who are struggling due to dire financial situations. Those who are late on a mortgage payment might be wondering how this is going to impact their credit score. The answer is that it depends. 

How Does A FICO Credit Score Work? 

Someone’s credit score is a conglomeration of multiple factors including payment history, the amount of money owed, the length of the credit history,  and new credit. A late or missing mortgage payment is only going to impact one of these categories. Unfortunately, this also happens to be the largest factor, making up more than a third of the total credit score. 

A Late Mortgage Payment

First, it is important for everyone to know that a late payment is not going to impact someone’s credit score until it is late by more than a month. At the same time, people need to remember that the lender can still access a late fee. If someone has a high credit score with a long credit history, this late payment is not going to hurt as much. On the other hand, someone with a poor credit score and a short credit history might feel the sting a little bit more. 

Furthermore, it is important for people to note that a payment that is late by 60 or 90 days is going to hurt someone much more than a payment that is late by just one month. Therefore, even if a payment is going to be late, people should still try to pay it as early as possible.

Protect The Credit Score

It is important for everyone to try to do everything they can to protect their credit score. If they are worried they are not going to be able to make a mortgage payment, they should let the lender know and see what their options are.

 

12 Nov 2020
By Kevin Gahagan

How Are Different Mortgage Lenders Handling Student Loans During the Pandemic?

Mortgage

How Are Different Mortgage Lenders Handling Student Loans During the Pandemic?The coronavirus pandemic has had a massive impact on everyone. This pandemic has led to massive economic issues as well. Given the ongoing crisis as it relates to student loan debt, many students are wondering how the pandemic is going to impact their student loans and how their student loans are going to impact a potential mortgage payment. There are a few points to keep in mind.

Freddie Mac

In general, loans backed by Freddie Mac are going to use the student loan payment that is marked on the credit report. If this amount is $0 or unknown, then the lender is going to use 0.5 percent of the outstanding loan balance. This should also be reported on the credit report. Then, the lender will provide the borrower with information on possible mortgages.

Fannie Mae

When it comes to loans that are backed by Fannie Mae, students might still be on an income-driven repayment plan. In this case, the monthly payment might be zero and the lender may qualify a potential borrower with this $0 payment. On the other hand, if the loans have been deferred or are in forbearance, then the lender may calculate a payment that is equal to approximately 1 percent of the remaining balance on student loans. 

FHA Loans

For individuals going through FHA, the lender is going to run a few calculations. The lender may look at one percent of the remaining balance on the loan, the monthly payment that is reported on the credit report, or the actual documented payment as long as the borrower provides ample evidence. The lender will likely use the greater of these amounts in calculations. 

Why Do These Student Loan Payments Matter?

Credit reports are an essential part of the home-buying process. It is critical for everyone to understand what their student loan payments are and how they might impact their credit report. Furthermore, their student loan payments are also going to have an impact on the monthly mortgage payment they can afford. Therefore, it is important for everyone to make sure the information documented on their credit report is accurate when it comes to their student loans.

 

10 Nov 2020
By Kevin Gahagan

A Few Simple Ways To Upgrade The Kitchen Pantry

Mortgage, Real Estate Trends

A Few Simple Ways To Upgrade The Kitchen PantryDuring the past few months, people have been spending much more time at home than usual. Therefore, many people are looking for ways to upgrade their homes. A common area of focus is the kitchen.

Even though many people are thinking about upgrading cabinets and countertops, the kitchen pantry should also be a target for home improvement. There are a few simple ways that everyone can improve their kitchen pantry. 

Use Vertical Storage

One of the top tips for everyone to follow is to use vertical storage capacity. It is a smart idea for everyone to build in a few extra storage areas by thinking about under-shelf baskets. These baskets can help people instantly create space for various items and ingredients. Furthermore, think about using the insides of cabinet doors to create some extra shelves, walls, or baskets. This can significantly add to the storage space of a pantry.

Think About Specific Needs For The Pantry

When looking at a kitchen pantry, it is a great idea for everyone to think carefully about specific needs they might have. Consider what items need to be stored in the pantry. Then, shop for the right items. For example, many people like to store wine bottles in the pantry. These are awkwardly shaped items that might not fit on typical shelves. Therefore, thinking about a wine rack that will fit in the pantry is a great way to create some extra, specific storage.

Relocate Bulk Items Somewhere Else

Too often, people end up trying to store bulk items in the pantry. While it is true that shopping in bulk is incredibly cost-efficient, bulk items can also take up valuable space in the kitchen pantry in the blink of an eye. Think about finding alternative locations for paper goods, canned items, and other large, non-perishable items. This will instantly open up some more storage space in the pantry.

Upgrade Storage In The Kitchen Pantry

Upgrading the kitchen does not always have to be expensive. There are simple ways that everyone can create extra storage space in their kitchen pantry by simply moving some other items around. Consider adding storage baskets to the kitchen pantry to create some new storage space.

 

05 Nov 2020
By Kevin Gahagan

The Ultimate Payoff: Getting Debt Free Before Retirement

Mortgage

The Ultimate Payoff: Getting Debt Free Before Retirement

For many people, reaching retirement is something to look forward to. At the same time, too many people still have a lot of debt by the time they retire. In order for people to really take advantage of everything that retirement has to offer, they should try to find a way to pay off all of their debt before they retire. In order to make sure this happens, there are a few tips that everyone has to keep in mind.

Try To Keep Housing Costs Low

First, it is important for everyone to try to keep their housing costs as low as possible. Housing is one of the major sources of debt that people have when they retire. This could come in the form of a mortgage that has been stretched out for a longer period of time in order to send kids to college.

At the same time, as people start to approach retirement, they should try to attack this debt as much as possible. Remember that cash is king. Paying off a mortgage before retirement can really help people improve their quality of life on the other side of retirement.

Pay Down Credit Card Debt

Ideally, individuals are able to pay their credit card bills in full every month. Yes, it is great to take out credit cards because of the rewards that they provide and the positive credit history this can create. At the same time, if individuals end up carrying a lot of credit card debt, this can end up hurting them in the long run. In addition to damaging someone’s credit score, this can also take money away from retirement. Therefore, it is important for everyone to try to pay down their credit card debt as quickly as possible. That way, they do not have to worry about this when they retire and have more money they can spend every month.

Get Ready To Retire Debt Free

By following these tips, everyone is able to enjoy their retirement just a little bit more. By trying to find ways to retire without any debt, everyone is able to set themselves up for success. That way, they will be ready to take advantage of everything that retirement has to offer.

 

04 Nov 2020
By Kevin Gahagan

A Guide To Understanding Mortgages And Marriage Agreement Settlements

Mortgage

A Guide To Understanding Mortgages And Marriage Agreement SettlementsWhen people end up taking out a mortgage, there is a lot they need to consider. This includes the size of the down payment, the term of the loan, and the interest rate. At the same time, there are a few issues that could complicate the way a mortgage is paid off.

Nobody enters into a marriage planning on divorce; however, if this does take place, it is critical to think about how a marriage settlement agreement is going to impact the mortgage. There are a few important to keep in mind. 

Refinancing The Mortgage After The Marriage Settlement Agreement

When looking at the assets that the couple shares, it is important to think about not only assets but debt as well. One of the largest sources of debt is going to be the mortgage. Obviously, it is impossible to split the house down the middle. Therefore, it is important to think about how the mortgage itself is going to be divided.

When dividing a house following a divorce, the equity should be considered an asset and the mortgage should be considered debt. Then, when the settlement agreement is finalized, the best practice is to ask a spouse who is retaining ownership of the home to refinance the loan and just his or her name. This will eliminate the liability of the other spouse and remove his or her responsibility for paying off the mortgage. This is the fair and equitable way to divide a house following a divorce.

Include the Mortgage Among the Other Assets

It is important for everyone to think about how the mortgage is going to impact other assets as well. Some of the other factors that will have to be addressed during a divorce include alimony payments, child support, credit cards, financial accounts, and other types of property. When looking at the grand scheme of things, it is likely that the house is going to be the largest asset. Therefore, it might be helpful for couples to start with the house first and then worry about the smaller issues later. That way, this will streamline the divorce process and ensure that everyone ends up with a fair and equitable divorce settlement.