New Resolutions to Manage Your Mortgage Better

As we come into the New Year, everyone is making new resolutions.  Most of these resolutions are about losing weight.  But what many homeowners should do is make a new resolution to manage their mortgage better.  What many homeowners don’t realize is that poorly managing your mortgage can affect your credit.

Your credit score should be at least 760 or above in order to get great interest rates.  Therefore, mortgage lenders and other creditors look at this score when you want to refinance your home, borrow against your home or buy a new home.

As a financially struggling homeowner, you may be considering other ways to make your mortgage more affordable.  However, beware.  You have to look beyond the savings and carefully consider how they will affect your credit score.

Here are some examples of what to expect when you modify your loan:

* When getting a mortgage modification or short sale, you must expect some negative impact on your credit.  Several things can happen here, such as how the lender reports the deal, what’s already on your credit and more.  However, a short sale or loan modification is less harmful to your credit than bankruptcy.  Before seeking a mortgage modification or short sale, be sure to ask the lender how they will report it to the credit bureaus so you can weigh your options.  And remember, negatives on your credit file are removed after seven years.

* If you’re turned down for a loan several times or, better yet, have too many inquiries in a short period of time, it can harm your credit.  Too many rejections may indicate risky behavior. If you are shopping for a loan, do so within a 14 to 30 day period.  All mortgage inquiries are counted by FICO within that period as one inquiry.  Another great way to keep inquiries off your credit is to apply for credit in person.  You can ask the lender their requirements and what your chances for approval are.  This way, if the lender’s underwriting standards are too high, you can seek a more lenient lender.

* When you have an adjustable or subprime mortgage on your credit report, you can expect a zero impact.  You just have to keep making your payments on time to keep your score or boost it over time.

* When getting debt relief from a credit counselor, you should definitely expect a ding.  This is because you are not living up to the terms of your original credit agreement.  Only get the help if you absolutely need it.

We hope when you set your New Year’s resolutions that managing your mortgage and credit will definitely be a big part of it.

Your Jackson Mississippi Real Estate Proffessionals Mary & Bill Watkins