The best way to compare lenders is to ask for a Good Faith Estimate or a closing summary. Because of recent changes in lender rules, often they are reluctant to do a Good Faith Estimate until they've run your credit and you've found a house.
However, you can still compare closing costs between lenders. There are three main sections to the Good Faith Estimate or Closing Summary: the closing costs, the interest rate & loan term, and the monthly payment. Be sure to give all of the lenders the same estimated sales price or it could get confusing trying to figure out what's different between lenders and what's different because of the loan amount!
The closing costs are what you want to compare - particularly the lender fees. All of the other fees on the estimate will be actual expenses. The lenders may estimate them at slightly different rates, but ultimately you pay what the vendor charges. The lender fees, however, are what the lender makes on the loan and these can vary wildly. In the Bryan/College Station market, we generally see lender fees total about $600-1200 (if you're being quoted something higer, you need to shop around). The combination of these fees are usually the application fee, processing fee, funding fee, underwriting fee, etc. These are the fees that you can use, in combination with the interest rate, to see which lender is the best deal.
One last word of caution - internet lenders often show few or no lender fees. This isn't always true and you absolutely want a Good Faith Estimate because now lenders are required by federal regulation to be within a certain percentage of the estimate - so you won't have any big surprises at closing.
As a buyer's representative, I recommend local lenders who have historically been competitive in their fees and interest rates. I can also help buyers compare closing summaries from multiple lenders.
Tuesday, February 23, 2010
Sunday, February 14, 2010
How Do I Raise My Credit Score?
Every creditor you have an account with probably reports your payment history and outstanding balances every month to each of the three credit reporting agencies. This makes it easy to see results quickly – good or bad – when dealing with your credit.
The fastest way to improve your credit is to pay down credit card balances. If you are paying an extra $100 a month on your house or car payment, but have a large credit card balance, stop paying the extra on the house and get that credit card paid down! Chances are the house or car loan have lower interest rates. They’re also considered safer lines of credit than an unsecured credit card. Go to http://www.about.com/ and type in managing debt or managing credit card debt and read some great articles about credit scores and debt.
Credit scoring agencies have a variety of formulas to increase or lower your score, but high debt to available credit ratios are one of the fastest ways to drop your score.
Your past two years of payment history are the most important, so start paying on time NOW and in 24 months your score will rise significantly, even if you still have outstanding balances.
Finally, raising your credit score involves work – don’t try to pay someone to “fix” your credit. If there’s a true mistake, you can fix it yourself for free. It’s work to monitor it, it’s work to be sure you pay on time and it’s work to be responsible with your credit. But you’ll see results when it comes time to make your next big purchase and you get a super interest rate because of your high credit score!
The fastest way to improve your credit is to pay down credit card balances. If you are paying an extra $100 a month on your house or car payment, but have a large credit card balance, stop paying the extra on the house and get that credit card paid down! Chances are the house or car loan have lower interest rates. They’re also considered safer lines of credit than an unsecured credit card. Go to http://www.about.com/ and type in managing debt or managing credit card debt and read some great articles about credit scores and debt.
Credit scoring agencies have a variety of formulas to increase or lower your score, but high debt to available credit ratios are one of the fastest ways to drop your score.
Your past two years of payment history are the most important, so start paying on time NOW and in 24 months your score will rise significantly, even if you still have outstanding balances.
Finally, raising your credit score involves work – don’t try to pay someone to “fix” your credit. If there’s a true mistake, you can fix it yourself for free. It’s work to monitor it, it’s work to be sure you pay on time and it’s work to be responsible with your credit. But you’ll see results when it comes time to make your next big purchase and you get a super interest rate because of your high credit score!
Thursday, February 4, 2010
Free Credit Reports that really are free!
If you go to the right place, you are allowed to receive one free credit report per year from each of the three major reporting agencies. The problem is there are a lot of advertisements that say they offer free credit reports, but you really have to sign up for credit monitoring services or some other fee-based subscription. The government actually passed some very consumer-friendly legislation a few years ago that does get you a free - really, truly free - credit report. Go to http://www.annualcreditreport.com/ to get your copy.
All three credit reporting agencies are supposed to share their information. If that's really working the way it should, you should be able to pull one credit report from one agency and have a pretty good idea if you have any issues. You can pull all three reports at once, but then you don't get another freebie for a year. I would recommend pulling one report from each agency every four months - they're all free as long as you only pull from one agency per year. This allows you to monitor your credit throughout the year for free. If you see a mistake on one report you'll have to go to some effort to get it fixed but then each agency is supposed to share your information with each other.
For example, if TransUnion says you have an outstanding balance on a card that you paid and closed out last year, you can get a letter from the credit card company, send it to TransUnion with an explanation of the mistake and they should correct their report and forward your information to the other reporting agencies (this takes a while, usually 30-90 days once they verify your information). To be really safe, I'd send the information to all three agencies, but technically you shouldn't have to.
You won't get your credit score with this free report - it does cost a nominal fee - about $6 per report the last time I checked. You may not need it if you are just monitoring your accounts, what the balances are and whether or not they are being reported as paid on time. You won't hurt your credit pulling the report yourself, but there are issues with having multiple vendors pull your report, so be cautious when someone says they'll pull your credit for you. The exception is when shopping for a mortgage - you can have several loan officers pull reports and if they're all within a two week timeframe it should not afffect your credit score.
Stay tuned next time for things you can do to raise your credit score.
All three credit reporting agencies are supposed to share their information. If that's really working the way it should, you should be able to pull one credit report from one agency and have a pretty good idea if you have any issues. You can pull all three reports at once, but then you don't get another freebie for a year. I would recommend pulling one report from each agency every four months - they're all free as long as you only pull from one agency per year. This allows you to monitor your credit throughout the year for free. If you see a mistake on one report you'll have to go to some effort to get it fixed but then each agency is supposed to share your information with each other.
For example, if TransUnion says you have an outstanding balance on a card that you paid and closed out last year, you can get a letter from the credit card company, send it to TransUnion with an explanation of the mistake and they should correct their report and forward your information to the other reporting agencies (this takes a while, usually 30-90 days once they verify your information). To be really safe, I'd send the information to all three agencies, but technically you shouldn't have to.
You won't get your credit score with this free report - it does cost a nominal fee - about $6 per report the last time I checked. You may not need it if you are just monitoring your accounts, what the balances are and whether or not they are being reported as paid on time. You won't hurt your credit pulling the report yourself, but there are issues with having multiple vendors pull your report, so be cautious when someone says they'll pull your credit for you. The exception is when shopping for a mortgage - you can have several loan officers pull reports and if they're all within a two week timeframe it should not afffect your credit score.
Stay tuned next time for things you can do to raise your credit score.
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