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Archive for September, 2010

Contributed By:  Tim Coutts, President, CB&T Mortgage
Rates Hit Zero?

I happened upon an interesting article in the WSJ Market Watch. What would happen if mortgage rates hit zero? It certainly would entice all the buyers that have come to consider mortgage rates under 5% the norm into making the leap into home ownership. And, could you imagine a $550 payment on a $200,000 loan?

Taking rates to zero or at least close to zero would drum up so much demand in the economy that Title Companies, Mortgage Companies and all other industry related companies would essentially be understaffed and have to start hiring. Can you imagine?

What do you think would happen?

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Credit can be a wonderful thing, but, too much of a good thing can backfire on you. For prospective homeowners, loan approval relies more on your history of debt repayment than on your income or savings.

How do you know if your credit history is healthy? Don’t rely on guesswork. Order a copy of your credit record, preferably three months before applying for a loan. You’ll see where you stand and have time to clear up any errors which may appear in your credit records.

How is credit risk measured? In today’s lending market, most credit reports are automated, relying on a credit “scoring” system that analyzes about 100 variables to gauge the likelihood that the borrower will make on-time payments.

The information measured is gathered from retailers, public records, and sometimes credit applications and bank records. The score analyzes patterns over time, with more recent payment and debt habits holding greater weight.

In the scoring system used by Fair, Isaac—the originators of scoring software—the main criteria and their approximate percentage of importance are: (more…)

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