Now that you know what “bad credit” is considered to be, lets chat about refinancing if you have bad credit.

Your credit score is one of the biggest elements to the pricing of your mortgage loan. If you have bad credit, you can expect to have a significantly higher rate than what is advertised. Like we mentioned last week, that reason for that is that you are a much greater risk for not making your mortgage payment. When a borrower refinances, they are looking for a lower interest rate on their mortgage or shortening their loan terms.

If you have bad credit, refinancing does not make much sense. It would be highly unlikely that a lender would offer you better terms. (For those of you who may be in the other boat, the opposite holds true, too! If your credit has improved since you took out your mortgage initially, refinancing might be a good idea!)

Don’t get sucked into the “advertised on TV” or “advertised on the internet” refinancing tactics that are out there. These advertisements are usually for “well-qualified” borrowers. If you have bad credit or close to it, you would not fall into that category. Once you mention that your FICO score is 640 (or below) your interest rate will skyrocket and refinancing will not make any sense.

Last week, we share some ideas and things you can do to increase your credit score. If you need any more ideas, please reach out to us. We would be happy to help in any way possible!

Some of you are unsure what “bad credit” is. The reason that this is confusing to many is because the opinions vary. The opinion is different from different lenders. Typically, it is defined as a 620 FICO score. Fannie and Freddie and VA and USDA require 620 as a minimum. However, FHA can go as low as 500 if you have 10% equity in your home. You are likely to have very few options if your score really is that low.

If you think or aware that your credit score is low, it is important to realize what this means for you. Also, if you have a feeling that it is low, you should check to see what it is so you can start making adjustments to get that score higher.

Missing mortgage or credit card payments – especially chronically – is one clear indication that your credit score is likely low.

The lower your score, the more of a risk you are to borrowers. The risk being – if they let you borrow money from them, are you going to pay back what you owe? Creditors and lenders will charge you a higher interest rate since you are such a risk. About 39% of Americans fall in this category. So know, if you are here, you are not alone.

Also know, that there are ways you can increase your credit score. To start, begin to pay your loans back in a timely fashion. Pay down any debts you have as much as you can. You could also become an authorize user on a close family member’s credit card. Make sure this is someone who you know will pay back on time – it would need to be someone responsible and trustworthy. If you are already aware of why your credit score is low, work on fixing those areas. There are many other reasons you may have such a low score, as well, these are only a few.

Remember that “bad credit” is not the end of the world. There is a way out of it!

April 15, 2020 will be here before you know it! As you know, time flies. (And as you age, I feel like time goes by even quicker. Can anyone relate to that?)

So you aren’t incredibly stressed out come April 1, here is your reminder to start doing your tax preparation now. Not only will it save you time, but it will also be less likely to cause you stress and anxiety. If you have had any major changes in your life in the past year (buying a house, getting married, etc.) it is best to start preparing early. This is because events such as those can potentially affect your tax withholding. Any important documents that you think whoever is helping you file your taxes will need, be sure to put those to the side as well.

Don’t forget that you will not receive your W-2s or 1099s until about this time. Make sure your employer and investment providers have your correct address so you will receive your W-2 and 1099 in a timely manner.

The IRS encourages taxpayers to file their taxes electronically. Filing electronically is not only quick and secure, but you will also likely receive your tax return quicker. (Be sure to have your bank account information in there so you will receive your refund via direct deposit!)

As you are likely aware, when you increase the value of your home, you are also increasing your equity. It is a win-win on both sides. You will see a return on your investment when you decide to sell your home. You will also have a lower loan to value ratio while you are still living in the home. This lower loan to value ratio can play a role in refinancing options.

Remodeling your home is also fun and can make your home more comfortable. Just be sure you stay in your budget and do not spend more than you have!

A “2019 Cost VS Value Report” was done recently. This report tells you what the average cost of certain home renovations are and the highest percentage of return on investment.

If you are interested in the nitty gritty details of the report, please let us know. We would be happy to share it with you.

To keep it simple, the following are renovation ideas (with the highest return on investment first): garage door replacement, manufacturer stone veneer, kitchen remodel, wood deck addition, and siding replacement. As always, keep in mind the “need” VS “want” aspect when you are making a decision of where to go when it comes to renovations.

Either way, whatever your decision is, do what makes you happy and will keep your pocketbook happy, too!

Besides being extremely over the moon happy, there are more reasons to buy your home this year! The employment rate is low, wages are higher, and the economy is strong – these are even more reasons to snag your dream home in 2020! There is no time like the present.

Living in your dream home is reason enough. But on top of that, buying a home is an investment. A great investment, at that! Some say that it is even superior to gold, stocks, and bonds. Owning a home helps build equity. Over the past couple of years, there has been an increase of equity, too.

It is expected for the mortgage rate to not only decrease but also stay low for the rest of the year. What better time to get in on the low rate! These projections are for the thirty-year mortgage.

Unless you are miraculously not paying rent, why would you want to pay the mortgage for someone else when you could pay for your own mortgage? Keep that in mind the next time you pay your rent check. This will continue to be something to think about as the price of rentals continues to increase.

When savings are on the line, along with financial growth, we would recommend you really look into purchasing a home. Before making a final decision, make sure you have a chat with someone educated in the field!

Every year around this time, the Federal Housing Finance Agency changes the conforming loan limit for the next year. It was expected for the limit to increase, and that is exactly what has happened.

For a one-unit property, the loan limit in 2020 will be $510,400.00. The limits for two, three, and four-unit properties are even more. The loan is backed by Fannie Mae or Freddie Mac. From 2019, the limit has increased by $26,050.00!

This increase will likely help more homeowners qualify for a mortgage as they are already more available than others and possibly easier to get approved. This will also be beneficial for those planning to refinance their mortgage this year.

In order to get approved for a conforming loan, you only have to put three percent down. Keep in mind that there are other qualifications to get approved, as well.

In 2006, the conforming loan limit was $417,000.00. That means it has risen almost $100,000.00 in 14 years. The likelihood of the limit to continue to rise as the years go on is low. (However, if appreciation increases, then it may be possible.)

If you live in an extremely expensive area in the United States (Los Angeles, NYC, DC, etc.) will actually have a higher loan limit due to the Housing and Economic Recovery Act.

2020 is coming in fast! Can you believe it? It’s hard to say where the last year has gone. In preparation for the upcoming year, we thought it would be a good time to share with you some thoughts the housing market may face next year.

One hypothesis is that there will be a shortage of homes on the market, especially homes not incredibly expensive. Realtor.com suggests that inventory may reach a historic low, especially for entry-level homes. And although the production of homes has increased a bit, it will not be able to meet the demand.

The forecast for interest rates is expected to continue to stay low and move forward throughout the year. Although this can be not confirmed, as we cannot tell the future, many different outlets are in agreement.

Keep in mind that 2020 is an election year. This means anything can truly happen! No matter which side of the market you are on, it is important to be educated before making any decisions.

We heard back from many of you saying you are going crazy with scam calls but blocking the numbers have helped. We are glad you took our advice and started doing that! We did ask if anyone had any more tips to add to chime in with and the response was great. Thank you to those who gave their two cents. We will share them with you here!

A true debt collector will not ask you for any sensitive or private information. Not only does this include your social security number, but also your bank account, routing number, credit card number, passwords, etc. Someone who is not authentic is asking this type of information so they can try to commit identity theft.

A debt collector will not try to get you to pay off a debt via money transfer or any type of prepaid card. Both of these methods are untraceable. At the event you ever try to get your money back, it is not possible. Or if it is possible, it would be very difficult.

We reminded you last week to ask for a callback number at the event you do not feel like someone is being authentic. You can also contact the original creditor and confirm that they are the correct debt collector agency.

Also, we recommend you researching the First Debt Collections Practices Act. This protects you from a lot of things. Ultimately it is for your best interest.

A lot of friends and families are being inundated with scam callers – there are a lot of scams going around! (Quick tip: if they are calling your cell phone, once you have identified that it is a scam, block their number after you’ve hung up!)

Some of these calls sound pretty legitimate. There are a few warning signs to keep your ears open to in order to identify a scam call. (The obvious is out there – if you do not owe anyone money, it is most definitely a scam.) But like we mentioned last week, about 80% of people are in some kind of debt.

To start with, when a true debt collector is calling you, they must identify themselves and the amount of money they claim you owe. They must also send you written notice within five days of the phone call if they do not provide you with the information from the start.

You probably already know this but some people fall for it…a debt collector will not threaten you! There are some circumstances that may result in arrest if you owe fines for a criminal matter, though. A true debt collector will also not threaten to tell your employer, family, or friends. They cannot tell anyone without your permission.

Debt collectors also will not call you before 8am or after 9pm. If it is before or after these hours, they are likely trying to scam you.

When in doubt, ask them for a call back number and call them back! There is nothing wrong with being overly cautious.

Are there any other tips you would like to add to this list?

Did you know that roughly one in four employees do not put money away in savings every month? That is a lot of people! Almost eighty percent of Americans are living paycheck-to-paycheck. That is a lot of debt! The majority of debt comes from student loans, credit cards, car, and home. The amount of debt in those four areas has increased in 2019.

We want to help you get rid of some of your debt! We can’t give you a raise or a bonus. But we can give you some ideas!

To start off with, make paying off your debt a goal! If you have not written down all of your debt, we suggest you do so. When you write it down, be sure to include how much debt you owe from smallest to largest. You can also include your interest rate as well so you have everything in one place.

Have you started a budget yet? If not, please set one up. It is very important when paying off your debt is a goal. With a budget, you will be able to see where you are really spending your money and areas where you can spend less money. Once you have a more solid idea on your spending, you can put more money toward your debt. Start by making minimum payments on your debts.

Having an emergency fund will help protect you from getting in a similar situation again. It’s very important to have a fund like this! In the worse case scenario, you lose your job; you still have bills to pay. Emergency fund to the rescue!

Last but no least, do not accept advice from everyone. Like we mentioned earlier, the majority of people have debt. It does not make sense to accept advice from someone who has debt themselves. Keep that in mind when talking to others about your financial situation.

Whichever route you take, it will be a tough time but we know you can do it. It will take dedication but it is possible.