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Credit utilization reflects how much of your available credit is being used at a given time.   Lower credit utilization indicates that a borrower is not heavily relying on their credit and that they are using their credit responsibly. Is calculated by dividing your total credit card balances by your total limits.   The higher the percentage, the higher the risk which adversely affects the credit score according to most of the companies.   It is recommended that your credit utilization be under 30% to positively impact your credit score. If the available limit on a credit card is $12,000 and their normal monthly balance is around $3,000, they have a credit utilization of 25%.   If for whatever reason, the borrower's available limit was reduced to $6,000, and their long history of having a monthly balance of $3,000, the ratio, then, increases to 50% which will likely lower their credit score. For borrowers who use more than 30% of their available credit and regul...

Some people consider a house payment as basic as monthly utilities but with a plan and some discipline, you can be mortgage free. Consider a person borrowed $300,000 at 3% for 30 years, the principal and interest payment would be $1,264.81 and at the end of 12 years, the unpaid balance on the mortgage would be $210,900. If that same person had financed the home on a 15-year term at 2.5%, the payments would have been $2,000 but the unpaid balance at the end of 12 years would be $69,310.   The homeowner will have a larger equity but they have also had to make higher payments. 15-year mortgages usually have a lower interest rate than the 30-year loans and at the time this article was written, the difference in a 30-year loan was about 0.5%.   A 15-year loan gives the lender their money back in half the time.   If rates go up during the interim, they will be able to loan it at the higher rate sooner.   For that reason, they are usually willing to offer a slightly l...

Homeowners know the need to periodically check certain things around the home to ensure that things operate properly and efficiently.   If maintenance is required, it may be less expensive to take care of it early rather than waiting until it is not working at all. Checklists are helpful because it requires little effort to know what must be done.   They are usually concise and provide enough information to complete the task.   These items apply to most homeowners but in no way offer a comprehensive list. Vacuum dryer exhaust ... not only does it affect the efficiency of your dryer itself, the accumulation of lint along with the hot air can ignite and create a fire hazard. Replace HVAC filters 4 to 6 times a year ... This is one DIY project that almost everyone should feel confident in handling.   Locate the filter, make a note of the size, and keep replacements available.   Turn off the unit, open the door or housing, remove the dirty filter, ...

You don't have to have an Uncle IRRRL but you must be a veteran with a current VA-backed home loan. IRRRL is an acronym for Interest Rate Reduction Refinance Loan. To refinance with this program, also called the VA Streamline, the loan must provide a net tangible benefit (NTB) which would be in the financial interest of the Veteran.   Obtaining a lower interest rate is usually the reason behind refinancing but there needs to be enough difference in the current and the new mortgage to justify the expenses incurred.   Significantly lower payments or a shorter term are examples of acceptable benefit. The Veteran must currently have a VA-backed home loan to refinance using this program.   The Veteran does not have to currently live in the home as long as it can be certified that he or she did at one time. In most cases, an appraisal is not necessary and less verifications are required.   A minimum 640 credit score is needed, and borrower must be current on their pa...

The decision to buy first or sell first, has always been a little of the "Which came first: the chicken or the egg?" type of question.   Is it better to buy another home before you sell your current one or sell the current one before you buy the replacement? Some buyers don't have a choice because they need the equity out of the current home to purchase the new one and possibly, their income limits their ability to qualify for having both mortgages at the same time.   However, some buyers, with sufficient financial resources, may have other options available to facilitate the move. A home equity line of credit, HELOC, is a type of loan that a traditional lender like a bank will loan up to the difference in what is currently owed on the home and 75-80% of the value.   A borrower is approved for the line of credit and then, can borrow against it as needed.   A homeowner with sufficient equity, would want to secure a HELOC prior to contracting for the new home. ...

In divorce situations, it is common, for the spouse who keeps the home to refinance to remove the other spouse from the loan.   Equally as common, first-time buyers who don't have enough income to qualify may ask a parent to co-sign and must add their name to the mortgage. Another situation that requires removing or adding a person to a loan could be to qualify for a better interest rate.   The difference in a minimally acceptable credit score and something that might be considered "good" could be as much as a 0.5% higher rate for the term of the mortgage. Consider that a couple is buying a home on a conventional loan, and they have individual credit scores of 760 and 670.   The underwriters will price the loan based on the lower of the two scores.   A half percent interest on a $400,000 30-year mortgage could have close to $110 a month difference. A possible solution to this dilemma could be available, assuming the borrower with the higher credit score had eno...

Let's assume that you have owned your home for several years.  It has increased in value and the unpaid balance considerably less than you originally borrowed.  In short, you have equity in the home.  You're thinking about buying another home and one of the questions going through your mind is "should we find a replacement property before we put our home on the market? It is a good question but maybe there is another one you should be asking.  "Should we keep our current home and convert it to a rental when we buy another home?  The answer to the question may have a great deal to do with your finances but if you can afford it, it may end up being one of the better investments you have made. Do you have enough discretionary funds for a down payment and closing costs for your new home?  Is it enough to put 20% down payment so you can avoid paying mortgage insurance?  Can you qualify for the mortgage on the new home with the additional liability of yo...