Month: <span>October 2018</span>

It is common knowledge that one of the most important aspects of successfully securing a home loan is the maintenance of credit scores and debt management. Although they are not the only factors pertinent to obtaining a home loan, they are quite significant for the entire home purchase process.
FICO Scores demonstrates to lenders the strength of a borrower(s)’ ability to repay the loan. FICO scores tend to increase as a result of borrowers paying their creditors in a timely manner. The higher the FICO score, the higher the lender will trust the borrower with a loan. Therefore, it is advantageous for the borrower to increase one’s FICO scores in any way possible. In addition, those with higher FICO scores tend to be granted with lower interest rates because of the decreased risk to the lender, thus, saving them a greater amount off of their monthly mortgage payment.

Amongst other criteria, lenders also place a greater emphasis on a borrower(s)’ overall debt to income ratio. Average lender guidelines stipulate that a borrower(s)’ debt to income ratio ought to be between 45-50%.

Because preparing to purchase a home is not instantaneous for most people especially with today’s stricter lender guidelines, buyer(s) must take the time to get ready for that glorious day when they are able to close escrow on the home of their choice. It is best to set aside 6-12 months for preparation to buy a home especially if the buyer is aware of any credit and/or debt challenges. Once the prospective buyer has decided to embark upon homeownership, their first step should be contacting a Realtor who can assess their situation, offer them the resources necessary to improve their chances for owning a home and direct them towards an appropriate plan of action.

The next step for a prospective buyer is to gain a credit analysis from a respective loan consultant like Angela R. Lamb, Broker of Gshloans, LLC. The loan consultant will be able to define a current budget, price limits, as well as offer the buyer alternatives based on scenarios that may require a higher FICO, lower total debt ratios or the need for a down payment. This step is crucial because it determines whether or not the buyer can even get financing for the home purchase. The sooner that the buyer(s) can obtain a credit analysis, the quicker he/she can establish a clearer time frame as to when he/she will be able to successfully close escrow on their new home.

When less than desirable credit scores or debt issues are stumbling blocks for the buyer, it’s a great service when his/her Realtor and Loan Consultant are able to provide a legitimate solution to the challenge. To avoid future inconveniences, buyers need to consciously choose their “TEAM” for greater success on their journey to homeownership.

In today’s real estate market, homeownership is no longer as easy as it was during the ‘boom.’ Therefore, buyers must get saavy and discover ways to make themselves more attractive to lenders who become extremely critical of buyers in general.

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Budgeting is easy – well, easier – when you know exactly what your paycheck will be from one week to the next. You can plan for every eventuality and you never have to worry that the money simply won’t be there. However, learning how to budget when your paycheck varies is an entirely different animal.

USA family financeThere are hundreds of careers that involve paychecks that vary, and there is nothing wrong with having a slightly unstable payrate. For example, if you are a waitress, then your monthly income depends upon how much money you earn in tips. There is virtually no way to change that amount; if people don’t tip, then you don’t get the money. The same is true for someone who works on commission. Although you can always improve your sales tactics, you have no control over how and when people will buy your product. Another example of someone whose paycheck varies is a person who owns their own business. That is perhaps the most unsteady of incomes because your entire revenue depends on the success of your own business. The only way to get a raise is to improve your business.

How to Budget When Your Paycheck Varies: Average Your Income
There is no way for you to successfull budget a variable paycheck unless you can average your income. Go back at least six months (a year is better) and write down your paycheck amounts (or income) for each of those months. Add them all together, and divide by the number of months. For example, if your last six months of pay were: $2,400, $2,600, $3,200, $1,200, $2,000 and $3,000, then you would add those all together and divide by six. The end result is that your average income is $2,400.

How to Budget When Your Paycheck Varies: Average Your Expenditures

This is somewhat difficult than averaging your income, but it’s certainly doable. During the next month, write down everything on which you spend money. Include bills, grocery visits, eating out, entertainment costs, insurance, clothing and everything else. Separate them into categories; one should be things that you must pay every month, and everything else is extraneous. Obviously, you will spend more one month than you do another, but the point here is averages.

How to Budget When Your Paycheck Varies: Monthly Income Expenditures
Next, compare the two averages. For example, let’s say that your average expendistures amount to $1,800. Your average income, as mentioned above, is $2,400. That means that, between the two, you earn an excess of $600 per month on average.

How to Budget When Your Paycheck Varies: Plan for the Low Months
Just because your average income is $2,400 doesn’t mean that you will make your average every month. As mentioned above, some months you might make $3,000, but you also might make only $1,800. If your expenditures are lower than your lowest month of income, then you’re better off. However, if your lowest income is higher than your average expenditures, then you will have to budget accordingly.

How to Budget When Your Paycheck Varies: Savings
In order to budget for the lowest of your months, you will need to have a system for saving during the more lucrative months. For example, if you earn $3,000 one month, it isn’t frugal to go out and spend the $1,200 difference between that and your average expenditures. Instead, save that extra $1,200 for the low months, and live within your budget. Before you know it, living off a variable paycheck might result in a large and healthy savings account.…

Budget finance income Paycheck

If you have ever tried to lose weight then probably you know how difficult it is to improve your credit score. It is not something you can do quickly. If you try to raise your credit score based on bad advice, you must be prepared for these quick-fix efforts to backfire. If you ask me to put all of the advice in one sentence, I would probably say “Manage your credit responsibly”. It is indeed a uphill task to improve your credit score once it is down. Still following the tips below is very crucial to get your bad credit back on track.

Build a sound credit history
Always pay your bills on time, every time
Nothing ruins your credit report like a delinquent payment or a collection. In 70% cased this is the major negative factor in people’s credit report.

Always take corrective action ASAP
If you missed one or two payments, take corrective action as soon as possible. Longer you delay your payment, worst will be your credit score.

Collection Is Like a Life Sentence to Your Score
If you pay off your bills after they go to collection. It might be too late. Even if you pay, this will stay on your credit report for next seven years.

When in need, Seek Help
If you can not keep up with your payments and it is really getting difficult to make ends meet, talk to your creditors Or better seek help from a good credit counselor. This might not increase your credit score in short term but if you are able to manage your credit and start making payments on time, you will see your score rising over time.

Credit score factorsHow Much Credit is Enough & When to Stop
If you are juggling, Its enough already
It is very important that you do not use more than 30% of the limit on your credit cards. If you have to get a credit card just for it low balance transfer rates and low fees, Its time to stop spending more than you can afford. Heavy outstanding debt can really wreck a havoc on your credit scores.

Don’t Revolve your debt, Pay it off
Revolving credit is like juggling while walking on tight rope. Its very risky and one false move can ruin the show. Think twice if you want to take such a risk. The single best thing you can do to improve your credit score is to start paying off the debt your have been revolving around. Its cheaper. If two people owe $1000 each, One to 5 different banks and second owes the same amount to only one bank. who’s score you think will be better? Second one of course! Having too many credit accounts can affect your score.

Keep it low, take it slow
Closing more than 2 un-used credit card accounts in a short period can hurt your credit score instead of increasing it. If you have to close some credit card accounts, do it gradually over a longer period of time. i.e. one every two month. Similarly opening too many credit card accounts at once will definitely increase your available credit but it is disaster for your credit score. Contrary to popular notions such approaches to improve your credit score can actually backfire.

Average account age is quite a heavy variable, when credit rating agencies weigh your credit score. each new account you open will decrease your average account age. It is advisable to keep your oldest credit account i.e. collage loan account or student credit card

Always Shop around for a better loan rate, but don’t take ages
Each hit by creditors for your credit report is logged. many hits in a short span reflect that you are shopping for a fair loan rate. It does not affect your credit score. But if the trend continues for long time. i.e. 50 hits over a period of 4 months, credit rating agencies take it as if you are searching for new credit lines and this can drag your score a few points downward.

Check Your Credit Score as often as you like
Contrary to popular belief, checking your own credit report directly from credit reporting agencies or authorizing your credit counselor to do so, does not affect your credit score. Credit rating system can distinguish between financial institutions and individuals. In fact its good idea to keep an eye on your credit score to make sure you are doing well financially.

Having Credit is Good, More is Better
As a general rule, as long as you don’t default, having more credit card and un-secured installment loans will raise your credit score considerably. All you have to do is to make timely payments. For financial institutions, a person with no credit is a bigger risk than a person who has been making his loan payments on time.

Only get a credit card if you really need it
Opening a credit card account and never using it will not affect your credit score. So opening a credit account jut to have a better mix of credit is waste of time, effort and money.

Closing an account does not make it vanish
Every Opening and Closing of credit account will show up on your credit report. It will stay there for at least seven years. I will be weighed in for calculating your final credit score. Keep this factor in mind when you apply for a new credit card or close an old one.…

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