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Credit Scores

What is a credit score?

Before deciding on what terms lenders will offer you on a loan (which they base on the “risk” to them), they want to know two things about you: your ability to pay back the loan and your willingness to pay back the loan. For the first, they look at your income-to-debt obligation ratio. For your willingness to pay back the loan, they consult your credit score.   The most widely used credit scoring models have a range between 350 (high risk) and 850 (low risk).

Credit scores only consider the information contained in your credit profile. They do not consider your income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status. Credit scoring was developed as a way to consider only what was relevant to somebody’s willingness to repay a loan.

Different portions of your credit history are given different weights:

  • 35% of your score is based on your specific payment history.
  • 30% is your current level of indebtedness.
  • 15% is the time your open credit has been in use (ten year old accounts are good, six month old ones aren’t as good) and credit mix (installment loans such as student loans, car loans, etc. versus revolving and debit accounts like credit cards).
  • 5% is the number of inquiries — credit scores requested.

Your credit report must contain at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This ensures that there is enough information in your report to generate an accurate score. If you do not meet the minimum criteria for getting a score, we may still be able to help. For borrowers with no credit score we simply need to establish that you have been paying 3 things on time for a year. Give us a call and we can help determine that.

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HUD Home Financing Options

Understanding HUD Home Financing Options: A Comprehensive Guide

Buying a home is an exhilarating yet intricate process. For many, the dream of homeownership can seem daunting due to financial constraints. However, the U.S. Department of Housing and Urban Development (HUD) offers various financing options designed to assist individuals in purchasing HUD-owned homes, making the dream of owning a home more achievable. It is important to have a lender that is up to the challenge of navigating HUD home financing.

These properties are foreclosed homes. The previous owner had taken out an FHA mortgage and didn’t make the payments. Subsequently, these homes were foreclosed on. Often, these homes require repairs, and the utilities can’t be turned on. Frankly, HUD (the seller) doesn’t care – the properties are sold as-is, and HUD will not make any repairs to the home. That’s where things can get hairy if the lender is not equipped to navigate the process.

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