Category Archives: FICO scores

Two Years to the Down Payment You Need

home-buying-checklistEvery month you pay the rent, you’re probably thinking, “I wish this money was going into my future.” For a lot of would-be first-time home buyers, it’s the down payment which makes home ownership seem impossible.  Climbing the “down payment mountain” isn’t impossible. Like any major challenge, it’s all a matter of breaking your big, hairy, audacious goal down into practical steps. 

 Here are some tips to conquer saving for a down payment:

 Find out where your money goes. You can’t start saving if you don’t know where you’re spending. For a month or two, track each expenditure, no matter how small. Get an objective picture of where you’re spending the cash. thdpuyvjem If you are spending over $30 a month on coffee; maybe its time to buy a coffee maker and make your own? Most coffee houses sell ground coffee for at home brewing for a fraction of the cost of a daily cup.

Get specific about how much you need to save. Even if you’re not 100% sure what your down payment needs to be yet, it’s good to start doing a little math to figure out how much you need to save. Pick a dollar amount and a timeline to hit that dollar amount. For example, a $25,000 down payment in two years comes to $1,041/month. Sound unrealistic? Either scale down your home desires to something smaller or scale up your timeline. If you can wait three years, that monthly savings goal drops to $694/month.

 Determine the big moves you can make. If you’re in a three bedroom apartment and can stomach the idea of scaling down to a one  or two bedroom, how much would you save in rent? What about going from two cars down to one? If you can make it work, these sacrifices will have a huge impact on your savings goals.

 Setup a separate savings account. Don’t let your dream home money mingle with your regular checking or savings account. Establish a high-yield savings account with a credit union or money market account to protect and build your stash. It’s important to have a separate account with a “hands off” attitude. There are some great deals at some of the online bank institutes.

 Mind the risky investment schemes. Home Mortgage Down Payment, A Gray House, Brown Card And Calculator On Stone BackgroundOnce you have a little momentum, you might be tempted to take some of that cash and invest it in order to make it grow faster. Be very prudent about this, as investing in stocks, startups, or high-yield funds can easily decimate your savings. Be conservative.

 

Of course, it’s important to know how much home you want to buy when you’re saving up for your down payment. We’re happy to give you an idea what homes are selling for in your area.  And more importantly, we can put you in touch with a mortgage rep to determine how much house you can afford – reach out and we will help you make the first move towards your own home! 

Barbara & Gregg, The Nicholas Team of RE/MAX Village Square Realtors  realestate@thenicholasteam.com   973-509-2222

2016 WINTER BUYING AND SELLING GUIDES AVAILABLE

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The process of buying a home can be overwhelming at times, but you don’t need to go through it alone.

You may be wondering if now is a good time to buy a home…or if interest rates are projected to rise or fall. The free eGuide  for BUYERS or SELLERS will answer many of your questions and likely bring up a few things you didn’t even know you should consider when buying a home.

FICO looks to other data points for scoring

calculaterIf you’re in the market for a home, you’re probably in the market for a mortgage. With the exception of all-cash buyers, most buyers will find out soon what their FICO score is and what banks think about it.

The FICO score has a huge impact on whether or not lenders consider you an acceptable credit risk, and yet there are more than 53 million Americans out there who don’t have a credit score at all. This doesn’t mean they’re a bad risk, necessarily… it just means they haven’t used credit cards, held a previous mortgage, or had an auto loan. They may be perfectly responsible financial citizens. So how do they apply for a mortgage?

In an attempt to broaden access, FICO has begin to factor new data sources. Announced in April, 2015, FICO will now include two additional sources: A national utility database, presided over by Equifax, and LexisNexis, which relies on public records.

The idea behind the change is this: First, the timeliness of utility payments can be used as month-to-month evidence of financial health. Second, FICO will be looking at LexisNexis address changes to determine how often people have relocated. In theory, frequent moves may be an indication of increased risk.

Though the impulse may be good, the changes are not without some controversy. Some argue the accuracy of the Equifax database may be a concern. It also adds one more credit reporting database which must be monitored. There’s also a worry that the “frequency of move” may unfairly punish people and provide a disincentive for relocations, downsizing, and upsizing of homes, provided FICO only uses the LexisNexis information in a punitive way.

More details are sure to emerge, but one thing is for sure: The era of Big Data in the cloud will be sure to cast their shadow on the way financial institutions assess risk in the years ahead. One hopes that they ultimately let in more sunshine than shade when it comes to helping buyers attain the dream of homeownership.

Are you ready to explore the dream? Contact us today. We’d be happy to help you navigate the home buying or selling journey and help you find a great mortgage lender:mort The NicholasTeam, Barbara and Gregg you can call out office at: 973-509-2222  or email us at: realestate@TheNicholasTeam.com.   Visit our website for more information and to start your home search!