Skip to main content

Destiny or Fate (Posted May 30, 2016)

There’s absolutely nothing earth-shattering about this week’s edition of our lovely newsletter.  That doesn’t mean you should stop right here and not read it; I’m just helping you set a suitable level of expectations.  Not everything I write can be a literary masterpiece on par with To Kill a Mockingbird or The Lord of the Rings.  I’m only human. 

We’re going to have a little refresher course on debt and how it can BOOST your credit score.  For those of you who are playing at home, you’ll get extra points for neatness and essay-style answers.  Now, let’s look at how four key consumer loans can affect your mortgage worthiness: 

Student loans
Because these tend to take a while to pay off, they can help your credit score if you pay your bills on time – you’re able to establish a history of paying regularly. These loans count into your debt-to-income ratio, so understand they do limit the amount for which you can qualify and borrow until they’re paid off.

Auto loans
These can also raise your score as you’ve demonstrated the ability to diversify the types of debt you can carry.  A big part of the reason these play well into boosting your credit score is that an auto loan is harder to get than a credit card.  Lenders look upon this favorably. 

Payday loans
These don’t usually show on your credit report, but if you default, that could ding your credit.  If certain circumstances have brought you to the point of needing to obtain one of these loans, the most important thing to remember, of course, is to pay it off on schedule or sooner.  Wiping that debt off your plate will help have more cash available for other things.

Existing mortgage loans
Mortgages, when paid on time, are great for your credit score.  Conversely, missed payments on previous mortgages will make your new lender nervous.  Foreclosures, bankruptcies, and the like, obviously, are other concerns that can adversely affect your mortgage worthiness – but you already knew that, right? 

Now that we’re all on the same page, let me ask you just one question:  If your client hasn’t led a perfect “loan” life (as detailed above), do you want them to go to a lender who’s going to “refer” them out to a credit-cleaning service (who will probably charge) or to a lender who KNOWS HOW (free of charge) to help them clean and qualify?  This is not a slam on a credit-cleaning service at all, but they’re in the business to charge for a service – nothing more, nothing less – and that’s the extent of their motivation.  Sure, they want their customers to be happy and have an improved score, but their fee is their ultimate goal. 


Conversely, we have a vested interest not only to show them how to improve their credit score but to help them read and understand a credit report so they can see what needs to be done to – and this is the payoff!! – get that house.  THAT’s our motivation, plain and simple.  So, let me ask the question one more time: do you want a mortgage company that turns this over to a third party, or do you want us working one on one with your client?  Here’s a hint: it’s YOUR paycheck we’re talking about – control your destiny or subject yourself to fate.

Comments

Post a Comment

Popular posts from this blog

Numbers Don't Lie, But Wherein Lies the Truth? (Posted November 21, 2016)

Said with enough conviction, you can make almost anything sound true.   Preface the fabrication with “according to a recent bi-partisan government study,” and you’re three quarters of the way to selling the lie to a lot of people.   Seriously, try this. The next time you’re at a dinner party or having coffee with friends, pepper this little tidbit into the conversation: “I read something really interesting the other day.   According to a recent bi-partisan government study – I think it took them three years to get it all done – middle-aged men who drive either a Toyota Camry or a Honda Odyssey have more testosterone than younger men who drive either a Ford F150 or a Dodge Charger.”   You’ll get some raised eyebrows and looks of mild disbelief, but don’t let that deter you.   Just lift up your hands, palms outward, and say, “I just think it’s interesting, and it makes sense when you think about it” – and then change the subject to something completely u...
Post a Comment
Read more

Couching Your Savings Correctly (Posted July 25, 2016)

I recently read an article online about a gentleman who set a goal to purchase a home and then mapped out very specific steps as to how he would reach that goal.   Personally, I was extremely impressed by his discipline and foresight.   His goal had two parts to it: save $150,000 for a down payment and purchase a home.   Before you choke on your coffee or spit soda through your nose, let me disclose here that the gentleman who is the subject of the article was purchasing a home in the New York City area.   Now that your blood pressure is returning to normal and you’ve spared your freshly ironed white shirt from staining, I’ll give you a breakdown of his plan: •   Starting in 2007, he looked at his annual salary and then took a look at the amount of credit card debt he was carrying; he cut back on as many expenses as possible so he could pay off that credit card debt in the first year.   Touché! •   He kept his lifestyle scaled back to the poin...
Post a Comment
Read more

Dumb as (or Smart as) a Box of Rocks (Posted June 27, 2016)

Obviously, you all want to know what Brexit means to the economy and the housing market specifically.   So do I!   But since my crystal ball is at the cleaner’s, let’s give the Brits and the European Union a little time to work out the terms of their separation and look at something else.   What’s a “fad ”?   With the help of Google, this is what I got as a definition: “an intense and widely shared enthusiasm for something, especially one that is short-lived and without basis in the object's qualities; a craze.” In April 1975, an advertising executive by the name of Gary Dahl invented the Pet Rock.   The idea came from his sitting in a bar with some friends who were complaining about the cost and time required to take care of various types of pets.   He marketed his “pets” by placing a rock in a box cut and shaped like one you would get at the pet store to carry home a puppy or a kitten.   Along with the box and the rock, a booklet was included...
Post a Comment
Read more