Archive for December, 2008

Should you refinance your home?

Thursday, December 4th, 2008

The refinance boom during early 2000 was because of 911. The feds cut rates to improve the economics of that terrible time in American history. It seems like in 2008 the terrorist attacked our financial markets too. Naturally when the economy is bad the feds lower the feds funding rate to influence lower interest rates down the road. Lowering interest rates especially since we are in a recession will influence refinances and possible new home buyers. Current prime is 4%. This trickles over into other financial markets such as mortgage. In this article I wanted to discuss whether or not you should refinance your house.

Important refinance questions:

1. Are you going to be in your house for a minimum of 10 years? The reason I ask this is it will take about 10 years to recover the cost of a refinance.
2. Will you be lowering your interest rate a minimum of 1.5%. If you cannot lower your interest rate from your current rate at least 1.5%, you are wasting your money.
3. Do you have the value in your house to do a refinance? If you don’t have the value to roll in your refinance costs then you will have to pay the cost out of your own pocket. Have a lender make sure they can get value before you get knee deep in a refinance.
4. Refinance your house at the first of the year, the later during the year it is, the more escrow costs you will have to roll into your note.
5. What are the lender fees? Shop around and get some Good Faith Estimates to save on closing costs.

You can currently get interest rates on a 30 year fixed mortgage around 5.875%. This is a great interest rate. We project that interest rates could get in the upper 4ish range. This is another great opportunity to put your mortgage in a 15 yr and save on interest paid on your note.

Of course with the tightening up on credit requirements this might be a great time to check your credit report and see where your credit score stands. You definitely want to approach a lender educated about what is on your personal credit report. your resource for the latest credit news.

Should you worry about your credit score during a Recession?

Tuesday, December 2nd, 2008

You cannot turn on the TV, surf the web or listen to the radio without hearing about credit reports and credit scores. You might wonder what the buzz is all about. With the current tightening up with lending, your credit scores have become more important than ever. Let’s assume you want to get a home, and you have not checked your credit report in years. You probably don’t have the personal assurance that your credit report is what is should be. Maybe you know you have had some blemishes on your credit report. What ever the case is, you need higher credit scores these days to get approved for any loan.

You might notice car dealerships and all sorts of businesses going out of business. A lot of these businesses cannot get credit from lenders to continue doing business. So they have no choice but to close their doors. So just imagine if you have low credit scores or a credit report littered with collections what your answer is going to be with any creditor.

If banks have learned one lesson from the recent loan nightmare, that lesson is your credit score means a lot. In the past you could get loans with low credit scores, but that is not the case anymore. With the recession taking place you can be for certain that banks cannot afford to lend money to borrowers that are high risk. High risk borrowers are borrowers with low credit scores.

During a recession you might find yourself needing a loan, and with the bar being raised on credit report and credit score requirements you can be for certain that your credit score will need to be as high as possible to get a loan. Some banks will not lend to you unless your fico score is 680 or above.

If you are not for sure what is on your credit report or maybe you have no idea what your credit scores are. I would recommend getting a copy of your credit report now. Be a educated consumer about your creditworthiness.

Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.