Newsletter

Issue 1

February 2008

5 SMART STEPS TO PREPARE YOUR CREDIT SCORE FOR A MORTGAGE

Your credit score may be the most important personal item considered when applying for a mortgage. One negative mark could result in a higher interest rate and thousands of dollars extra in interest. Use the following timeline to prepare your credit and get the lowest possible interest rate

1 Year out.

Pull your credit reports and scores from all 3 agencies at annualcreditreport.com.
Credit scores are based on your credit report and mortgage interest rates are based on credit scores. Review each of your credit reports and dispute any negative marks with the Credit Bureau. If the Credit Bureau refuses to remove the negative mark, take it up with the Creditor. If the Creditor refuses to remove the mark, hire an attorney to write a letter. It is better to pay a couple hundred dollars for an attorney than to pay thousands of dollars of extra interest.

6 months out.

Start researching mortgage options.
Many people are losing their homes today because they did not understand the terms of their mortgage. They entered with low rates but then the rates increased. Understand the differences between Adjustable Rate Mortgages (ARMs), Fixed Rate, Hybrid, and Interest only. The most conservative mortgage is the Fixed Rate, but if you only plan on selling your home after 5 years, then a 5 year ARM may be best. With this mortgage, your rate will only adjust after the 5 year period.

Once you have a rough idea of the rate of your mortgage, determine how much you can afford. There are a variety of mortgage calculators online that will help you determine your monthly payment. Because you can afford the maximum payment does not mean that you want the maximum payment. Consider also the monthly real estate taxes and maintenance charges that will be included in your housing expense. In some case, you will be responsible for insurance costs also. As a guideline, your housing expense, insurance, and utilities should be kept below 30 percent of your gross income.

3 Months out.

Make final improvements to your credit report and score.
Pay down your credit cards to under 30 percent of the balance, 10 percent is ideal. Be sure to pay all of your bills on time, one late payment can be devastating to your credit score and the rate that you can secure. It is critical that you do NOT close any credit cards nor should you open any new cards. Both of these will have a negative affect on your credit score.

2 Months out.

Get pre-approved.
Pre-qualified means that you have consulted with a mortgage broker and they have given you an idea of what you can afford. A pre-approval is a commitment from a lender that they will give you a loan. A letter will make you look like a better prospect to potential sellers once you find a place to buy.

Talk with a Real Estate Broker.

If you are considering buying, its never too late or too soon ask questions. A broker can give you insights into the existing market and on the process of purchasing an apartment. Each transaction is different, but you may be working with this person for 3-4 months. The broker you choose will be key part of your life for the duration of your journey. Make sure they are experienced, professional and is someone that you enjoy working with.

What's new? We're growing!!

We are now a fully licensed, independent brokerage firm! We offer services in the commercial, medical, and residential markets. We have just been appointed Exclusive Marketing Agents for 2 residential buildings in Queens and a loft building in Brooklyn. Stay tuned for more to come!