16 Feb

Improve your Credit Score. Here’s how!

Debt

Posted by: Kiki Berg

Your credit score is a big factor when you apply for a mortgage.

It can dictate how good your interest rate will be and the type of mortgage you qualify for.

Mortgage Professionals are experienced helping clients with a wide range of credit scores so we can find you a mortgage product even if your credit is far from perfect.

The good news about your credit score is that it can be improved:

  1. Stop looking for more credit. If you’re frequently seeking credit that can affect your score as can the size of the balances you carry. Every time you apply for credit there is a hard credit check. It is particularly important that you not apply for a credit card in the six months leading up to your mortgage application. These credit checks may stay on your file for up to three years.
  2. Don’t max it out. If your credit card is maxed out all the time, that’s going to hurt your credit score. Make some small monthly regular payments to reduce your balance and start using your debit card more. It’s important that you try to keep your balance under 30% or even 20% of your credit limit.
  3. Make your credit payments on time. People are often surprised that not paying their cell phone bill can hurt their credit score in the same way as not making their mortgage payment.
  4. Use your cards. That’s so its use is reported to credit reporting agencies. As long as you pay the balance off quickly you won’t pay any interest.
  5. Clear up your collections. You may not realize that an old cell phone bill, utility bill might be in collections. While you may disagree with it, pay it off and deal with it after.

You may wish to consider special credit cards used to rebuild credit. You simply make a deposit on the card and you get a credit limit for the value of that deposit. They are easy to get because the credit card company isn’t taking any risks. I have options to assist in rebuilding your credit as well.

Kiki Berg, Mortgage Strategist.

29 Dec

Fighting with your spouse? A 2nd mortgage might fix your marriage and your money.

Debt

Posted by: Kiki Berg

​​​Did you know that 30% – 40% of couples who get divorced is over money. Divorce isn’t cheap either, so now is the time to fix your fighting and your finances!

Are 2nd mortgages a good idea? Sure, as long as you have an exit strategy, a budget and plan on how it will get paid off at the least amount of cost.

With any debt consolidation loan, 2nd mortgage or other options; you want to ensure you can afford the payments, look at all debt repayment options and work with a debt or mortgage planner to ensure you are achieving your goal. Don’t just band aid a problem…

So let’s take a look at a real life household family situation…

Jack and Jill own a home, have two young kids, a fur friend, a camping trailer and two vehicles. Jack and Jill both work making about $110,000 a year combined. In the past, Jill took a few years off on maternity leave and during that time, the income dropped and the debts increased. The hot water tank flooded the basement, so $3000 for a new tank onto the credit card. They figure they can pay it off in a few months. Then, Jill’s best friend decided to have a destination wedding! Well fun times, also costs Jack and Jill $5000 to go to Hawaii to be part of the wedding. In keeping up with the Jones next door, they bought a trailer to go camping and the proud owner of  a 45,000 loan of 8% and $300 a month payments. What’s $300 right? Then Jack needed a Dodge Ram 1500 to tow their new trailer and got a $45,0000 loan at $700 per month. Yikes, insurance for those just increased your monthly payments from $130 a month to $160 a month…oh and the GAS! It’s for the family, so they tighten their budget spending.  While camping, Jack injures his back while goofing around with his ATV and is off work for 2 months and collecting EI…and the debt snowball monthly payment crunch effect begins and so does the depression, fighting and sometimes separation. Not enough money at the end of the month.  Sound like your family?

Getting out of debt might require some hard decisions, such as selling assets. Challenge is the value of the new trailers, trucks and toys drops up to 10% when you drive it off the lot and your loans are usually higher than your toys. Many times there is lots of equity in home that you just can’t access right now due to credit issues or you just don’t want to break your existing mortgage (eek penalties). In a year or two you know you can wrap all the debt into your 1st mortgage and your payments will all be back in affordability line. It’s all in the planning and everyone’s family and financial situations are unique.

“Why not just get a consolidation loan from the bank”, the client asks…
Absolutely! IF you can qualify. If your financial strife has caused you late payments, then your credit score took a swan dive to the “sorry can’t help you land” from the Bank.
Also, Banks can only loan you up to 65% of the value of your home due to new government rules and you need to have enough income to qualify for your new loan. Today, there are more declined debt consolidation loans than ever and people are seeking out expensive debt repayment programs or bankruptcy options that have up to $4500 in freaky fees and can kill your credit for up to 7 years. While these programs can be helpful for some, not always required to fix the problem.

How do 2nd mortgages work out there in Google Land?
Just Google 2nd mortgages and you may find many well know companies and mortgage experts who offer them. They may be called home equity loans, debt consolidation loans or freedom loans…they are all 2nd mortgages with a “pretty name” and no exit plan.  Finding the right company who isn’t going to charge you a 10% fee, 14% rates and huge renewal fees is another story. An example of a 2nd mortgage story where this happened. Client needed $40,000, finance company charged a $4000 fee and 11% rate for a 1 year term with a renewal rate of $2000. Bad planning here. Paying 10% fee and $2000 renewal rate is highway robbery in my opinion!

How 2nd mortgages roll in my office.
If you own a home, I can help. Maybe it’s not a 2nd mortgage you need…maybe it’s a reality check conversation and some idea tossing and budget planning.  If it is a 2nd mortgage you really want or need…I have made it my mission in life to make sure the average family going through life events isn’t getting screwed along the way. I have a standard fee for any size loan. $2500 and built into the loan. I use a few private lenders that are either FEE FREE or very low fees of under 2% of the loan. I have been doing this for 10 years, so my relationships with my lenders are good for clients. Bad credit, no or low income…no problem.

We always set up our clients with an exit strategy. You should not have a 2nd mortgage for more than 2 or 3 years and we ensure that your credit is rebuilt and up to Banking standards within a few years, so you can qualify anywhere.

If you’re feeling overwhelmed with debt, and your story sounds like Jack and Jill…give me a call or email for your 30 minute pro bono consultation that could save your finances and your family.

Kiki Berg, Professional Mortgage Strategist.
kiki.mortgages@gmail.com
778-808-7756