Repossession Credit Scores: What You Need to Know

One of the harsh truths of secured loans is that your asset can be repossessed if you fail to make the payments. In the words of the FTC, “your consumer rights may be limited” if you miss your monthly payments, and when that happens, both your financial situation and your bank balance will take a hit.

On this guide, we’ll look at what can happen when you fall behind on your car payments, and how much damage it can do to your credit score.

What is a Car Repossession?

An auto loan is a loan acquired for the sole purpose of purchasing a car. The lender covers the cost of the car, you get the vehicle you want, and in return you pay a fixed monthly sum until the loan balance is repaid.

If you fail to make to make a payment or you’re late, the lender may assume possession of your car and sell it to offset the losses. At the same time, they will report your missed and late payments to the main credit bureaus, and your credit score will take a hit. What’s more, if the sale is not enough to cover the remainder of the debt, you may be asked to pay the residual balance.

The same process applies to a title loan, whereby your car is used as collateral for a loan but isn’t actually the purpose of the loan.

To avoid repossession, you need to make your car payments on time every month. If you are late or make a partial payment, you may incur penalties and it’s possible that your credit score will suffer as well. If you continue to delay payment, the lender will seek to cover their costs as quickly and painlessly as possible.

How a Repossession Can Impact Your Credit Score

Car repossession can impact your credit history and credit score in several ways. Firstly, all missed and late car payments will be reported to the credit bureaus and will remain on your account for up to 7 years. They can also reduce your credit score. 

Secondly, if your car is repossessed on top of late payments, you could lose up to 100 points from your credit score, significantly reducing your chances of being accepted for a credit card, loan or mortgage in the future. 

And that’s not the end of it. If you have had your car for less than a couple of years, there’s a good chance the sale price will be much less than the loan balance. Car repossession doesn’t wipe the slate clean and could still leave you with a sizable issue. If you have a $10,000 balance and the car is sold for $5,000, you will owe $5,000 on the loan and the lender may also hit you with towing charges.

Don’t assume that the car is worth more than the value of the loan and that everything will be okay. The lender isn’t selling it direct; they won’t get the best price. Repossessed vehicles are sold cheaply, often for much less than their value, and in most cases, a balance remains. 

Lenders may be lenient with this balance as it’s not secured, so their options are limited. However, they can also file a judgment or sell it to a collection agency, at which point your problems increase and your credit score drops even further.

How Does a Repo Take Place?

If you have a substantial credit card debt and miss a payment, your creditor will typically take it easy on you. They can’t legally report the missed payment until at least 30-days have passed and most creditors won’t sell the account to a collection agency until it is at least 180-days overdue.

This leads many borrowers into a false sense of security, believing that an auto loan lender will be just as forgiving. But this is simply not true. Some lenders will repo your car just 90-days after your last payment, others will do it after 60 days. They don’t make as many allowances because they don’t need to—they can simply seize your asset, get most of the money back, and then chase the rest as needed.

Most repossessions happen quickly and with little warning. The lender will contact you beforehand and request that you pay what you owe, but the actual repo process doesn’t work quite like what you may have seen on TV. 

They’re not allowed to break down your door or threaten you; they’re not allowed to use force. And, most of the time, they don’t need to. If they see your car, they will load it onto their truck and disappear. They’re so used to this process that they can typically do it in less than 60-seconds.

It doesn’t matter whether you’re at home or at work—you just lost your ride.

What Can You Do Before a Repo Hits Your Credit Score?

Fortunately, there are ways to avoid the repo process and escape the damage. You just need to act quickly and don’t bury your head in the sand, as many borrowers do.

Request a Deferment

An auto loan lender won’t waste as much time as a creditor, simply because they don’t need to. However, they still understand that they won’t get top dollar for the car and are generally happy to make a few allowances if it means you have more chance of meeting your payments.

If you sense that your financial situation is on the decline, contact your lender and request a deferment. This should be done as soon as possible, preferably before you miss a payment.

A deferment buys you a little extra time, allowing you to take the next month or two off and adding these payments onto the end of the term. The FTC recommends that you get any agreement in writing, just in case they renege on their promise.

Refinance

One of the best ways to avoid car repossession, is to refinance your loan and secure more favorable terms. The balance may increase, and you’ll likely find yourself paying more interest over the long-term, but in the short-term, you’ll have smaller monthly payments to contend with and this makes the loan more manageable.

You will need a good credit score for this to work (although there are some bad credit lenders) but it will allow you to tweak the terms in your favor and potentially improve your credit situation.

Sell the Car Yourself

Desperate times call for desperate measures; if you’re on the brink of facing repossession, you should consider selling the car yourself. You’ll likely get more than your lender would and you can use this to clear the balance. 

Before you sell, calculate how much is left and make sure the sale will cover it. If not, you will need to find the additional funds yourself, preferably without acquiring additional debt. Ask friends or family members if they can help you out.

How Long a Repo Can Affect Your Credit Score

The damage caused by a repossession can remain on your credit score for 7 years, causing some financial difficulty. However, the damage will lessen over time and within three or four years it will be negligible at best.

Derogatory marks cease to have an impact on your credit score a long time before it disappears off your credit report, and it’s the same for late payments and repossessions.

Still, that doesn’t mean you should take things lightly. The lender can make life very difficult for you if you don’t meet your payments every month and don’t work with them to find a solution.

What About Voluntary Repossession?

If you’re missing payments because you’ve lost your job or suffered a major change in your financial circumstances, it may be time to consider voluntary repossession, in which case there are no missed payments and you don’t need to worry about repo men knocking on your door or coming to your workplace.

With voluntary repossession, the borrower contacts the lender, informs them they can no longer afford the payments, and arranges a time and a place to return the car. However, while this is a better option, it can do similar damage to the borrower’s credit score as a voluntary repossession, like a traditional repossession, is still a defaulted loan.

Missed payments aside, the only difference concerns how the repossession shows on the borrower’s credit report. Voluntary repossession will look better to a creditor who manually scans the report, but the majority of lenders run automatic checks and won’t notice a difference.

Summary: Act Quickly

If you have student loan, credit card, and other unsecured debt, a repo could reduce your chances of a successful debt payoff and potentially prevent you from getting a mortgage. But it’s not the end of the world. You can get a deferment, refinance or reinstate the loan, and even if the worst does happen, it may only take a year or so to get back on track after you fix your financial woes.

Repossession Credit Scores: What You Need to Know is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

Mortgage Rates vs. Fed Announcements

File this one under “no correlation,” despite a flood of news articles claiming the Fed’s rate cut directly impacts mortgage rates. Today, the Fed cut the federal funds rate by half a percentage point to a range of 1-1.25% due to the uncertainty surrounding the coronavirus, this despite a strong U.S. economy. That sent mortgage [&hellip

The post Mortgage Rates vs. Fed Announcements first appeared on The Truth About Mortgage.

Source: thetruthaboutmortgage.com

Watch Out for Low Mortgage Rates You Have to Pay For

Mortgage rates keep on marching lower and lower, with new records broken seemingly every week. But with all the fervor surrounding mortgage rates, some lenders are playing the “how low can we appear to go” game. For example, mortgage lenders may be talking about their lowest rates (with multiple points required), as opposed to offering [&hellip

The post Watch Out for Low Mortgage Rates You Have to Pay For first appeared on The Truth About Mortgage.

Source: thetruthaboutmortgage.com

5 Steps for Getting a Car Loan

This Article was Updated July 5, 2018

When you are looking to buy a vehicle, the first thing you should do is apply for a preapproved loan. The loan process can seem daunting, but it’s easier than you think and getting preapproval prior to going to the car dealer may help alleviate a lot of frustration along the way.

Here are five steps for getting a car loan.

  1. Check Your Credit
  2. Know Your Budget
  3. Determine How Much You Can Afford
  4. Get Preapproved
  5. Go Shopping

1. Check Your Credit

Before you shop for a loan, check your credit report. The better your credit, the cheaper it is to borrow money and secure auto financing. With a higher credit score and a better credit history, you may be entitled to lower loan interest rates, and you may also qualify for lower auto insurance premiums.

Review your credit report to look for unusual activity. Dispute errors such as incorrect balances or late payments on your credit report. If you have a lower credit score and would like to give it a bit of a boost before car shopping, pay off credit card balances or smaller loans.

If your credit score is low, don’t fret. A lower score won’t prevent you from getting a loan. But depending on your score, you may end up paying a higher interest rate. If you have a low credit score and want to shoot for lower interest rates, take some time to improve your credit score before you apply for loans or attempt to secure any other auto financing.

2. Know Your Budget

Having a budget and knowing how much of a car payment you can afford is essential. You want to be sure your car payment fits in line with your other financial goals. Yes, you may be able to cover $400 a month, but that amount may take away from your monthly savings goal.

If you don’t already have a budget, start with your monthly income after taxes and subtract your usual monthly expenses and how much you plan to put in savings each month. For bills that don’t come every month, such as Amazon Prime or Xbox Live, take the yearly charge and divide it by 12. Then add the result to your monthly budget. If you’re worried, you spend too much each month, find simple ways to whittle your budget down.

You’ll also want to plan ahead for new car costs, such as vehicle registration and auto insurance, and regular car maintenance, such as oil changes and basic repairs. By knowing your budget and what to expect, you can easily see how much room you have for a car payment.

3. Determine How Much You Can Afford

Once you understand where you are financially, you can decide on a reasonable monthly car payment. For many, a good rule of thumb is to not spend more than 10% of your take-home income on a vehicle. In other words, if you make $60,000 after taxes a year, you shouldn’t spend more than $500 per month on car payments. But depending on your budget, you may be better off with a lower payment.

With a payment in mind, you can use an auto loan calculator to figure out the largest loan you can afford. Simply enter in the monthly payment you’d like, the interest rate, and the loan period. And remember that making a larger down payment can reduce your monthly payment. You can also use an auto loan calculator to break down a total loan amount into monthly payments.

You’ll also want to think about how long you’d like to pay off your loan. Car loan terms are normally three, four, five, or six years long. With a longer loan period, you’ll have lower monthly payments. But beware—a lengthy car loan term can have a negative effect on your finances. First, you’ll spend more on the total price of the vehicle by paying more interest. Second, you may be upside down on the loan for a larger chunk of time, meaning you owe more than the car is actually worth.

4. Get Preapproved

Before you ever set foot on a car lot, you’ll want to be preapproved for a car loan. Research potential loans and then compare the terms, lengths of time, and interest rates to find the best deal. A great place to shop for a car loan is at your local bank or credit union. But don’t stop there—look online too. The loan with the best terms, interest rate, and loan amount will be the one you want to get preapproved for. Just know that preapproved loans only last for a certain amount of time, so it’s best to get preapproved when you’re nearly ready to shop for a car.

However, when you apply, the lender will run a credit check—which will lower your credit score slightly—so you’ll want to keep all your loan applications within a 14-day period. That way, the many credit checks will only show as one inquiry instead of multiple ones.

When you’re preapproved, the lender decides if you’re eligible and how much you’re eligible for. They’ll also tell you what interest rate you qualify for, so you’ll know what you have to work with before you even walk into a dealership. But keep in mind that preapproved loans aren’t the same as final auto loans. Depending on the car you buy, your final loan could be less than what you were preapproved for.

In most cases, if you secure a pre-approved loan, you shouldn’t have any problems getting a final loan. But being preapproved doesn’t mean you’ll automatically receive a loan when the time comes. Factors such as the info you provided or whether or not the lender agrees on the value of the car can affect the final loan approval. It’s never a deal until it’s a done deal.

If you can’t get preapproved, don’t abandon all hope. You could also try making a larger down payment to reduce the amount you are borrowing, or you could ask someone to cosign on the loan. If you ask someone to cosign, take it seriously. By doing so, you are asking them to put their credit on the line for you and repay the loan if you can’t.

When co-signing a car loan, they do not acquire any rights to the vehicle. They are simply stating that they have agreed to become obligated to repay the total amount of the loan if you were to default or found that you were unable to pay.

Co-signing a car loan is more like an additional form of insurance (or reassurance) for the lender that the debt will be paid no matter what.

Usually, a person with bad credit or less-than-perfect credit may require the assistance of a co-signer for their auto financing and loan.

5. Go Shopping

Now you’re ready to look for a new ride. Put in a little time for research and find cars that are known to be reliable and fit into your budget. You’ll also want to consider size, color, gas mileage, and extra features. Use resources like Consumer Reports to read reviews and get an idea of which cars may be best for you.

Once you have narrowed down the car you are interested in, investigate how much it’s worth, so you aren’t accidentally duped. Sites such as Kelley Blue Book or Edmunds can help you figure out the going rate for your ideal car. After you’re armed with this information, compare prices at different car dealerships in your area. And don’t forget to check dealer incentives and rebates to get the best possible price.

By following these steps, you’ll be ready to make the best financial decision when getting a car loan. Even if you aren’t ready to buy a car right now, it doesn’t hurt to be prepared. Start by acquiring a free copy of your credit summary.

It is always a good idea to pull your credit reports each year, so you can make sure they are as accurate as they should be. If you find any mistakes, be sure to dispute them with the proper credit bureau. Remember, each credit report may differ, so it is best to acquire all three.
If you want to know what your credit is before purchasing a car, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get a free credit score updated every 14 days.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Image: istock

The post 5 Steps for Getting a Car Loan appeared first on Credit.com.

Source: credit.com

FHA vs. Conventional Loans: Which Is Better?

When it comes to affording a new home, you have a few types of home loans to choose from. Prospective homebuyers often compare the FHA vs. the conventional loan when researching loans. Each loan type has certain stereotypes associated with them, but we are here to give you the facts about both FHA and conventional loans. This post will help you understand what each loan is, familiarize you with the differences between them, and provide some guidelines for how to pick which one is best for you.

What Is An FHA Loan?

An FHA loan is insured by the Federal Housing Administration (FHA). These loans are issued by private lenders, but lenders are protected from losses by the FHA if the homeowner fails to repay. FHA loans are generally used to refinance or buy a home.

What Is A Conventional Loan?

A conventional loan is supplied by a private lender and isn’t federally insured. Requirements for obtaining a conventional loan vary depending on the lender. When used to buy property, conventional loans are typically known as mortgages.

What Is A Conventional Loan?

Differences Between FHA and Conventional Loans

The main difference between FHA and conventional loans is whether or not they are insured by the federal government. Conventional loans aren’t federally backed, so it’s riskier for the lender to loan money. On the other hand, FHA loans are protected by the government, and as a result of less risk, they can typically offer better deals.

This difference in federal insurance is the reason why FHA and conventional loans vary when it comes to the details of the loan. Keep reading to learn the differences regarding credit requirements, minimum down payments, debt-to-income ratios, loan limits, mortgage insurance, and closing costs.

FHA Loan Conventional Loan
Minimum Credit Score 500 620
Minimum Down Payment 3.5% 3%
Maximum Debt-to-Income Ratio Credit score of 500: 43%
Credit score of 580+: 43-50%
Credit score of 620: 33-36%
Credit score of 740+: 36-45%
Loan Limits Low-cost counties: $356,362
High-cost counties: $822,375
Contiguous US: $548,250
High-cost counties, AK, HI, and US territories: $822,375
Mortgage Insurance Mortgage insurance premiums required. Private mortgage insurance required with down payments less than 20%.
Property Standards Stricter standards, property purchased must be a primary residence. Flexible standards, property purchased doesn’t have to be a primary residence.

Sources: FHA Single Family Housing Policy Handbook | Fannie Mae 1 2 | Federal Housing Finance Agency | Freddie Mac | HUD 1 2 | Consumer Financial Protection Bureau 1 2

Credit Score

Your credit score is a determining factor in your loan eligibility. Your credit score is measured on a scale of 300 (poor credit) to 850 (excellent credit). Good credit helps you get approved for loans more easily and at better rates. FHA and conventional loans differ in their credit score requirements and represent financial options for individuals at either end of the credit spectrum.

Minimum Credit Score for FHA Loan: 500

  • Accepts a credit score as low as 500, but usually with a 10% down payment
  • These loans accept lower credit scores because they are insured
  • Note: Some lenders may only issue FHA loans with higher credit scores

Minimum Credit Score for Conventional Loan: 620

  • Accepted score may vary from lender to lender
  • These loans are usually offered to individuals with strong credit because they present less risk to lenders

Minimum Down Payment

A down payment is the sum of money that is paid as a percentage of your purchase up-front.

Minimum Down Payment on an FHA loan:

  • 10% of your purchase with 500 credit score
  • 3.5% of your purchase with 580+ credit score

Minimum Down Payment on a Conventional Loan:

  • 3% of your purchase can be put down with good credit
  • 5% to 20% of your purchase price is typical

Debt-to-Income Ratio

Your debt-to-income ratio is the amount of money paid toward debt each month divided by your total monthly income. To be eligible for a loan, you must be at or below the maximum debt-to-income (DTI) ratio.

Maximum DTI Ratio Guidelines for FHA loans:

  • 43% with a credit score of 500
  • 43–50% with a credit score of 580

Maximum DTI Ratio Guidelines For Conventional Loans:

  • 33-36% with a credit score lower than 740
  • 36-45% with a credit score of 740 or higher
  • 50% highest allowed through Fannie Mae

Loan Limits

Both FHA and conventional loans have limits on the amount that you can borrow. Loan limits vary based on your location and the year your loan is borrowed. Find 2021 loan limits specific to your county through the Federal Housing Finance Agency.

2021 FHA Loan Limits

  • High-cost counties: $822,375
  • Low-cost counties: $356,362

2021 Conventional Loan Limits

  • Contiguous US (excluding high-cost counties): $548,250
  • Alaska, Hawaii, US territories, and high-cost counties: $822,375

Mortgage Insurance

Mortgage insurance is taken out to protect the lender from losses in case you fail to repay your loan. Whether you will pay private mortgage insurance or mortgage insurance premiums is based on your loan type and down payment percentage.

FHA Loan

  • Mortgage insurance is required for all FHA loans.
  • It is paid to the FHA in the form of mortgage insurance premiums and includes an up-front and monthly premium.
  • MIP payments last the entire life of your FHA loan.
  • To get rid of MIPs after paying 20% of your loan, you can choose to refinance into a conventional loan.

Conventional Loan

  • Private mortgage insurance (PMI) is only required when a down payment below 20% is made.
  • PMI comes in different forms: monthly premium, up-front premium, and split premiums.
  • PMI requirements stop once you have met one of three requirements:
    1. Principal loan amount is reduced to 80% before the loan term ends.
    2. At least 78% of the principal balance is scheduled to be paid down.
    3. The halfway point of your loan term has passed.

Property Standards

There are different property standards that must be met to use each loan. FHA loans have stricter requirements, while conventional loans have more flexibility.

FHA Loan

  • Property purchased with FHA loans must be your principal residence, meaning the borrower has to occupy the residence
  • FHA loans can’t be used to invest in property (e.g., renting out or flipping)
  • Title must be in the borrower’s name or name of a living trust

Conventional Loan

  • Property purchased with a conventional loan doesn’t have to be a principal residence — second or third residences are allowed
  • Conventional loans can be used to purchase investment properties

Pros and Cons of FHA vs. Conventional Loans

As a result of the various differences between FHA and conventional loans, each type has its respective pros and cons.

FHA Loan

Conventional Loan

Pros

  • Qualify with low credit and high DTI
  • Smaller down payments overall
  • More affordable with low credit
  • Lowest option for down payments with good credit
  • PMI cancellable
  • More affordable with good credit
  • Property doesn’t have to be your main home

Cons

  • Mortgage insurance premiums required for life of loan
  • Property purchased must be your main home
  • Need higher credit and lower DTI to qualify
  • Typically has larger down payments
  • PMI required with a down payment less than 20%

Pros and Cons of FHA Loans

FHA loans are government-regulated and insured to extend flexible opportunities for homeownership. They’re flexible regarding credit and DTI, but stricter about insurance and property standards.

Pros

  • Flexible qualification with low credit and high DTI
  • Smaller down payments overall
  • More affordable with low credit

Cons

  • Mortgage insurance premiums required for life of loan
  • Property purchased must be your primary residence

Pros and Cons of Conventional Loans

Conventional loans can also offer flexibility, but generally only if you have good credit and demonstrate reduced risk to the lender. These loans have stricter qualifications, but flexibility in other areas.

Pros

  • Lowest option for down payments (3% with good credit)
  • Private mortgage insurance can be canceled (must meet requirements)
  • More affordable with good credit
  • Property purchased doesn’t have to be a primary residence

Cons

  • Strict qualifications require higher credit and lower DTI
  • Larger down payments are typical
  • Private mortgage insurance required with a down payment less than 20%

Which Loan Is Better For You?

Both FHA and conventional loans have their advantages and disadvantages. Here are some general guidelines for when to use an FHA loan or a conventional loan.

When To Use an FHA Loan

  • You have a low credit score (500–619)
  • Your DTI ratio is on the higher side (between 45–50%)
  • You can only afford a small down payment
  • You plan to use the property as your primary residence

When To Use an FHA Loan

When To Use a Conventional Loan

  • Your credit score is fairly good (620 or above)
  • Your DTI ratio is on the lower side (33–36%)
  • You can afford a larger down payment
  • You want flexibility with insurance and repaying your loan

When To Use a Conventional Loan

It’s important to thoroughly research your options before choosing a loan. A key takeaway when comparing FHA vs. conventional loans is that FHA loans are federally insured and conventional loans aren’t. This distinction results in different qualification and payment requirements for each loan.

Use the information in this post to carefully compare the differences in accepted credit scores, minimum down payments, loan limits, maximum debt-to-income ratios, mortgage insurance and property standards. In doing so, choose the loan that works for your circumstances and helps you best afford the home of your dreams.

Sources: FHA Single Family Housing Policy Handbook | US Dept. of Housing and Urban Development | Federal Housing Finance Agency | Freddie Mac

The post FHA vs. Conventional Loans: Which Is Better? appeared first on MintLife Blog.

Source: mint.intuit.com

GSCU Mortgage Rates Reviews: Today’s Best Analysis

Granite State Credit Union (GSCU) provides members with a variety of mortgage products across the state of New Hampshire.

GSCU AT A GLANCE

Year Founded 1945
Coverage Area New Hampshire 
HQ Address 1415 Elm Street, Manchester, New Hampshire 03101
Phone Number 1-800-645-4728

 

GSCU COMPANY INFORMATION

  • Services the state of New Hampshire
  • Offers conventional loans, such as fixed- and adjustable-rate mortgages
  • Provides FHA and VA loans to qualifying individuals
  • Allows first-time homebuyers to make down payments of zero to three percent
  • Member of the NHCUL and CUNA
  • Allows borrowers to use gifted funds for the down payment and closing costs on certain loan products

Granite State Credit Union provides a variety of mortgage products to individuals across the state of New Hampshire. It offers traditional loans, such as fixed- and adjustable-rate mortgages, as well as government-assisted loans and options for individuals who cannot put 20 percent down on a new home.

GSCU Mortgage Facts

  • Services the state of New Hampshire
  • Offers conventional loans, such as fixed- and adjustable-rate mortgages
  • Provides FHA and VA loans to qualifying individuals
  • Allows first-time homebuyers to make down payments of zero to three percent
  • Member of the NHCUL and CUNA
  • Allows borrowers to use gifted funds for the down payment and closing costs on certain loan products

Overall

gscu mortgage rates reviewGranite State Credit Union provides a variety of mortgage products to individuals across the state of New Hampshire. It offers traditional loans, such as fixed- and adjustable-rate mortgages, as well as government-assisted loans and options for individuals who cannot put 20 percent down on a new home.

Current GSCU Mortgage Rates

GSCU Mortgage Products

Granite State Credit Union provides a variety of home mortgage products. Its offerings consist of traditional mortgages and government-assisted loans, as well as programs for first-time home-buyers and affordable home refinances.

Fixed-Rate Loans

Fixed-rate loans are the best choice for homebuyers who plan on staying in their home for an extended period. With fixed-rate loans, buyers can expect their principal and interest rates to remain the same throughout the loan’s lifetime. GSCU offers fixed-rate mortgages for lengths of 10, 15, 20, and 30 years.

Adjustable-Rate Loans

An adjustable-rate mortgage (ARM) provides borrowers with an interest rate that may vary throughout the loan term. Typically, these mortgages have a lower initial rate than fixed-rate loans, giving potential customers more financial freedom when looking for a new home.

After the initial period, the rates and payments associated with these mortgages may rise or fall to adjust to market prices. Typically, these costs will fluctuate on an annual basis.

Many companies, including GSCU, provide a cap that prevents these costs from getting too high from one year to the next. GSCU recommends these types of mortgages for home-buyers who do not plan on staying in the house for the loan’s full term. GSCU offers 1/1, 3/1, 5/1, and 7/1 ARMs.

First-Time Homebuyer Loans

GSCU offers excellent deals on mortgages for first-time buyers. The credit union gives borrowers the flexibility to choose a fixed- or adjustable-rate mortgage and even provides no and low down payment options to first-time buyers. The No Down Payment mortgage allows borrowers to take out a 5/1 ARM and pay zero percent down on the home.

The Low Down Payment Adjustable loan offers a 3 percent down payment with a 3/3 ARM and the option to refinance into a fixed mortgage if so desired. The Low Down Payment Fixed loan offers a 3 percent down payment and a 30-year fixed-rate mortgage. For Low Down Payment Adjustable and Fixed mortgages, borrowers can use gifted funds for the down payments and closing costs on their homes.

FHA Loans

Unlike some other credit unions, GSCU offers FHA loans to home-buyers who do not qualify for other loan programs. Borrowers may have a high debt-to-income ratio, low credit score, or the inability to put 20 percent down on the home. The Federal Housing Administration (FHA) created these types of home loans to grant buyers the opportunity to invest in property. GSCU allows 100 percent of the closing costs to be gifted.

VA Loans

GSCU allows veterans, military members, and their spouses to apply for VA loans. These types of mortgages are backed by the U.S. Department of Veterans Affairs (VA). Qualified individuals can make a low down payment on the home and keep up with affordable monthly payments.

HARP Loans

The Federal Housing Finance Agency (FHFA) introduced the Home Affordable Refinance Program (HARP) as part of their Making Home Affordable™ initiative. HARP allows eligible homeowners to refinance their mortgages into a lower interest rate to keep their finances secure. HARP provides this opportunity for individuals who otherwise may not qualify for refinancing due to their declining home value.

GSCU Mortgage Customer Experience

Granite State Credit Union offers a variety of online resources that help current and prospective borrowers research home loan options. GSCU’s website contains several mortgage calculators, which assist home-buyers in determining how much they can take out on a home loan.

It also provides information about their different mortgage products, which helps borrowers figure out what type of home loan is right for them. GSCU has a Refer-a-Loan option, which incentivizes borrowers who refer a New Hampshire resident or business owner to procure a loan with the credit union.

In exchange for this referral, both parties can receive $25 for consumer loans or $50 for the mortgage and home equity loans.

GSCU Lender Reputation

Founded in 1945, Granite State Credit Union has provided affordable mortgage rates to New Hampshire residents for over 70 years. Its Nationwide Mortgage Licensing System ID number is 477276.

Since the credit union only services the states of New Hampshire, it does not have many online customer reviews. It is not accredited by the Better Business Bureau, and has no reviews on the site, but maintains an A+ rating.

GSCU Mortgage Qualifications

Although GSCU has flexible mortgage qualifications for individuals taking out FHA loans, its qualification requirements for individuals requesting other home loans are similar to mortgage industry standards.

First and foremost, the credit union prioritizes credit score when approving someone for a loan or for calculating their rates. FICO reports that the industry-standard credit score is 740. However, those with credit scores above 760 can expect the best mortgage rates.

Credit score Quality Ease of approval
760+ Excellent Easy
700-759 Good Somewhat easy
621-699 Fair Moderate
620 and below Poor Somewhat difficult
No credit score n/a Difficult

Buyers should typically expect to put 20 percent down on the home, unless they qualify for a government-assisted loan. In some cases, buyers can anticipate paying as little as zero to three percent on their mortgage down payment.

With certain types of loans, such as first-time home-buyer, FHA, and VA loans, GSCU allows borrowers to use gifted funds to make down payments and pay closing costs. However, those taking out a traditional fixed- or adjustable-rate mortgage should anticipate paying these costs on their own.

History of GSCU

Granite State Credit Union (GSCU) was founded in 1945 in Manchester, New Hampshire. Founder John Edward Grace, who previously worked as a city bus driver, put down an initial deposit of $15.

With the work put forth by John and his wife, Betty, GSCU achieved notability and success before merging, in late 2003, with the Acorn Credit Union. GSCU is currently a member of the New Hampshire Credit Union League (NHCUL) and Credit Union National Association (CUNA). It offers a selection of home loan products, including fixed- and adjustable-rate, VA, FHA, HARP, and first-time home-buyer loans.

Bottom Line

If you live in New Hampshire, GSCU may be a great fit for you! With a variety of mortgage products, GSCU has something to offer for everyone. For more information, visit their website. 

The post GSCU Mortgage Rates Reviews: Today’s Best Analysis appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

How to Escape Debt in 2016

How to Escape Debt in 2016

The new year is right around the corner and if you’re like most people, you’ve probably got a running list of resolutions to achieve and milestones to reach. If getting out of debt ranks near the top, now’s the time to starting thinking about how you’re going to hit your goal. Developing a clear-cut action plan can get you that much closer to debt-free status in 2016.

1. Add up Your Debt

You can’t start attacking your debt until you know exactly how much you owe. The first step to paying down your debt is sitting down with all of your statements and adding up every penny that’s still outstanding. Once you know how deep in debt you are, you can move on to the next step.

2. Review Your Budget

A budget is a plan that sets limits on how you spend your money. If you don’t have one, it’s a good idea to put a budget together as soon as possible. If you do have a budget, you can go over it line by line to find costs you can cut out. By eliminating fees and unnecessary expenses like cable subscriptions, you’ll be able to use the money you save to pay off your debt.

3. Set Your Goals

How to Escape Debt in 2016

At this point in the process, you should have two numbers: the total amount of money you owe and the amount you can put toward your debt payments each month. Using those two figures, you should be able determine how long it’s going to take you to pay off your mortgage, student loans, personal loans and credit card debt.

Let’s say you owe your credit card issuer $25,000. If you have $500 in your budget that you can use to pay off that debt each month, you’ll be able to knock $6,000 off your card balance in a year. Keep in mind, however, that you’ll still need to factor in interest to get an accurate idea of how the balance will shrink from one year to the next.

4. Lower Your Interest Rates

Interest is a major obstacle when you’re trying to get out of debt. If you want to speed up the payment process, you can look for ways to shave down your rates. If you have high-interest credit card debt, for instance, transferring the balances to a card with a 0% promotional period can save you some money and reduce the amount of time it’ll take to get rid of your debt.

Refinancing might be worth considering if you have student loans, car loans or a mortgage. Just remember that completing a balance transfer or refinancing your debt isn’t necessarily free. Credit card companies typically charge a 3% fee for balance transfers and if you’re taking out a refinance loan, you might be on the hook for origination fees and other closing costs.

5. Increase Your Income

How to Escape Debt in 2016

Keeping a tight rein on your budget can go a long way. But that’s not the only way to escape debt. Pumping up your paycheck in the new year can also help you pay off your loans and increase your disposable income.

Asking your boss for a raise will directly increase your earnings, but there’s no guarantee that your supervisor will agree to your request. If you’re paid by the hour, you can always take on more hours at your current job. And if all else fails, you can start a side gig to bring in more money.

Hold Yourself Accountable

Having a plan to get out of debt in the new year won’t get you very far if you’re not 100% committed. Checking your progress regularly is a must, as is reviewing your budget and goals to make sure you’re staying on track.

Photo credit: Â©iStock.com/BsWei, ©iStock.com/marekuliasz, ©iStock.com/DragonImages

The post How to Escape Debt in 2016 appeared first on SmartAsset Blog.

Source: smartasset.com

Does Refinancing Hurt Your Credit?

Before you make any big financial decision, it’s crucial to learn how it may affect your credit score. If you’re looking to refinance, it’s natural to wonder if it might hurt your credit.

Typically, your credit health will not be strongly affected by refinancing, but the answer isn’t always black and white. Whether you’re still considering your options or already made your choice, we’ve outlined what you need to know about refinancing below.

What Is Refinancing?

Refinancing is defined by taking on a new loan to pay off the balance of your existing loan balance. How you approach a refinancing decision depends on whether it’s for a home, car, student loan, or personal loan. Since refinancing is essentially replacing an existing debt obligation with another debt obligation under different terms, it’s not a decision to take lightly.

If you’re worried about how refinancing will affect your credit health, remember that there are multiple factors that play into whether or not it hurts your credit score, but the top three factors are:

1) Having a Solid Credit Score

You won’t be in a strong position to negotiate refinancing terms without decent credit.

2) Earning Sufficient Income

If you can’t prove that you can keep up with loan payments after refinancing, it won’t be possible.

3) Proving Sufficient Equity

You’ll also need to provide assurance that the payments will still be made if your income can’t cover the cost. It’s recommended that you should have at least a 20 percent equity in a property when refinancing a home.

 

criteria-for-being-able-to-refinance-successfully

 

How Does Refinancing Hurt Your Credit?

Refinancing might seem like a good option, but exactly how does refinancing hurt your credit? In short, refinancing may temporarily lower your credit score. As a reminder, the main loan-related factors that affect credit scores are credit inquiries and changes to loan balances and terms.

Credit Inquiries

Whenever you refinance, lenders run a hard credit inquiry to verify your credit score. Hard credit inquiries typically lower your credit scores by a few points. Try to avoid incurring several new inquiries by using smart rate shopping tactics. It also helps to get all your applications in during a 14–45 day window.

Keep in mind that credit inquiries made during a 14–45 day period could count as one inquiry when your scores are calculated, depending on the type of loan and its scoring model. Regardless, your credit won’t be permanently damaged because the impact of a hard inquiry on your credit decreases over time anyway.

Changes to Loan Balances and Terms

How much your credit score is impacted by changes to loan balances and terms depends on whether your refinanced loan is reported to the credit bureaus. Lenders may report it as the same loan with changes or as an entirely new loan with a new open date.

If your loan from refinancing is reported as a new loan, your credit score could be more prominently affected. This is because a new or recent open date usually means that it is a new credit obligation, therefore influencing the score more than if the terms of the existing loan are simply changed.

How Do Common Types of Refinancing Affect Your Credit?

Refinancing could help you pay off your loans quicker, which could actually improve your credit. However, there are multiple factors to keep in mind when refinancing different types of loans.

 

main-types-of-refinancing-that-can-affect-your-credit

 

Refinancing a Mortgage

Refinancing a mortgage has the biggest potential impact on your credit health, and it can definitely affect your FICO score. How can you prevent refinancing from hurting your credit too much? Try concentrating your credit inquiries when you shop mortgage rates to a 14–45 day window — this will help prevent multiple hard inquiries. Also, you can work with your lenders to avoid having them all run your credit, which could risk lowering your credit score.

If you’re unsure about when to refinance your mortgage, do your research to capitalize on the best timing. For example, refinancing your mortgage while rates are low could be a viable option for you — but it depends on your situation. Keep in mind that losing your record of paying an old mortgage on time could be harmful to your credit score. A cash-out refinance could be detrimental, too.

Refinancing an Auto Loan

As you figure out if refinancing your auto loan is worth it, be sure to do your due diligence. When refinancing an auto loan, you’re taking out a second loan to pay off your existing car debt. In some cases, refinancing a car loan could be a wise move that could reduce your interest rate or monthly payments. For example, if you’re dealing with an upside-down auto loan, you might consider refinancing.

However, there are many factors to consider before making an auto loan refinancing decision. If the loan with a lower monthly payment has a longer term agreement, will you be comfortable with that? After all, the longer it takes to pay off your car, the more likely it is to depreciate in value.

Refinancing Student Loans

When it comes to student loan refinancing, a lower interest rate could lead to major savings. Whether you’ve built up your own strong credit history or benefit from a cosigner, refinancing can be rewarding.

Usually, you can refinance both your federal and private student loans. Generally speaking, refinancing your student loans shouldn’t be detrimental in the grand scheme of your financial future. However, be aware that refinancing from a federal loan to a private loan will have an impact on the repayment options available to you. Since federal loans can offer significantly better repayment options than private loans, keep that in mind before making your decision.

Pros Cons
If the cost of borrowing is low, securing a lower interest rate is possible Credit scores can drop due to credit checks from lenders
If your credit score greatly improved, you can refinance to get a better rate Credit history can be negatively affected by closing a previous loan to refinance
Refinancing a loan can help you lower expenses in both the short term and long term Refinancing can involve fees, so be sure to do a cost-benefit analysis

How to Prevent Refinancing from Hurting Your Credit

By planning ahead, you can put yourself in a position to not let refinancing negatively affect your credit and overall financial health.

Try to prepare by reading your credit reports closely, making sure there are no errors that could keep your credit application from being approved at the best possible rate. Stay one step ahead of any errors so you still have time to dispute them. As long as you take preventative measures in the refinancing process to save yourself time and money, you shouldn’t find yourself struggling with the refinancing.

If refinancing makes sense for your situation, you shouldn’t be concerned about it hurting your credit. It might not be the most ideal situation, but it’s extremely common and typically relatively easy for your credit score to bounce back.

If you notice that your new loan from refinancing causes alarming changes when you check your credit score, be sure to reach out to your creditor or consider filing a dispute. As long as you’re prioritizing your overall financial health through smart decision making and budgeting, refinancing shouldn’t adversely hurt your credit in the long run.

 

 

 

The post Does Refinancing Hurt Your Credit? appeared first on MintLife Blog.

Source: mint.intuit.com

Does a Refinance Require an Appraisal?

Mortgage Q&A: “Does a refinance require an appraisal?” A reader recently asked if they needed an appraisal to refinance their existing mortgage, knowing they can often add weeks to the loan process. As with anything in the mortgage realm, the answer is it depends. Mainly, it depends on the type of loan you plan to [&hellip

The post Does a Refinance Require an Appraisal? first appeared on The Truth About Mortgage.

Source: thetruthaboutmortgage.com