March 2016

Credit 201: FICO Credit Scores and Improving Credit

In our last post, Credit 101: Understanding Credit for Home Buyers, we discussed some basics about your credit and where to find your credit reports for the purpose of understanding why having good credit is so important when applying for a home loan. This next mini educational course will go over what a FICO score is, what impacts it, and start exploring how to improve your credit score. Welcome to Credit 201! What is a FICO credit score? FICO stands for Fair Isaac Corporation, who developed the first credit scoring system back in the 1950s. FICO is now the official name of the company, but they still generate THE credit score lenders refer to when deciding on your eligibility for a loan. Conversationally, “FICO score” is synonymous with “credit score.” However while all FICO scores are credit scores, not all credit scores are FICO scores. It is important to make…

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Credit 101: Understanding Credit for Home Buyers

It’s not uncommon for people to start caring about their credit score when they are looking into making a big purchase, such as their first house. And if you discover that your credit isn’t as good as you thought it was, it can make your home-buying process that much more of a challenge. Lucky for you, I have more than 25 years of experience as a lender guiding new home buyers through the brambles of credit towards their goal of owning a home. However in order for me to help you improve your credit, you need to understand it. My plan is to give you a mini educational course. Welcome to Credit 101!   What is credit? Credit is the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future. There are four types of credit that…

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5 Differences between FHA and Conventional Home Loans

There are many different types of home loans out there these days. It’s hard to figure out where to start. I’d like to save you hours of scanning the Internet by breaking down the fundamental differences between the two most common types of home loans: FHA and Conventional. 1. The Basics Let’s start with some basic information. By definition, A Federal Housing Administration (FHA) loan is government-backed, while a conventional home loan is not. This means that if you default on a conventional loan, your lender has no guarantee for repayment. If you default on an FHA loan, the FHA insures that the lender will be repaid in full. Because of the FHA home loan’s guarantee, the underwriting process may take longer and there are additional FHA requirements, such as a health and safety inspection. The wait and additional requirements can be worth it, though, if an FHA home loan…

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