Holding on to a house is probably the first priority on every owners list right now. When the economy took a nose dive, so did the possibility that life as a homeowner might end faster than you anticipated. But now that things are looking up, employment isn’t in the toilet anymore, and we are seeing less and less foreclosure signs in the neighbor’s front yard, it might be time to take a fresh look at how to keep your home. Refinancing is big right now; and many people are still trying to maintain their new year’s resolution of debt consolidation. But before you start throwing out numbers and calling creditors, take these mortgage and refinance tips into consideration.
1. To FHA or Not to FHA: Federal Housing Administration mortgages are popular because it allows them to buy a home with as little as 3.5 percent down; however, the already costly FHA fees that are added to your loan will increase again this year. As the costs of FHA mortgages rise, some buyers may consider saving a little extra money for a conventional loan. Depending on their credit, buyers need at least 5 percent down to get a conventional mortgage. If you can afford the slightly higher down payment, get quotes and compare the costs for FHA and conventional loans.
2. Upside down on your home?: If you owe more than your home is worth and have tried and failed to refinance, why not give it another shot this year? The Home Affordable Refinance Program, or HARP 2.0, was refurbished to allow homeowners to refinance regardless of how deeply underwater they are.
3. Leave your credit score be, for now: Sometimes, a second credit report for borrowers is offered a few days before closing. Do not open new accounts or charge up your credit cards at the furniture store while you wait for closing day. New credit lines and maxed-out cards may hurt your score. If you were on the edge when you qualified, your mortgage loan could be rejected at the last minute.
4. Keep Your Credit Score Pristine: Credit standards remain tight. As new mortgage rules are unveiled in 2013, the standards are not expected to loosen. If you plan to get a mortgage anytime soon, you must treat your credit as one of your most valuable assets. You’ll need a credit score of at least 720 to get the best rate on a mortgage. Borrowers with a credit score of 680 or more can still get a good deal, but the lower your score, the harder it will be to get approved. Review your credit report before you apply for a mortgage. Sometimes, paying part of your credit card balances can boost your credit score quickly. Generally, if you are using more than 30 percent of the available credit on your cards, you may be hurting your score. Also, check for credit errors and have them corrected before you apply for a loan.