Friday, August 05, 2005
What is Affordable Housing?
Did you know that a person can make a million dollars a year and not have affordable housing? Affordable housing, contrary to what people tend to think, is simply housing that is affordable. It's really that simple.
Often times a bank will look at two numbers when they are trying to determine how much home you can afford. They will make sure that you are not spending more than 29% of your income on your mortgage payment. They will also make sure that you do not have debts totalling more than 41% of your income. These numbers are not set in stone, but they are general guidelines. A person with more than 41% of their income in debt can still qualify for a loan if their credit history and credit scores are very good. It is up to the lender to decide what those exact percentages should be based on your situation.
At the same time, however, you need to be careful that you don't accumulate too much debt. Taking on a mortgage that will put you over the 50% debt figure will be a bad thing, regardless of how much money you make. Any lender that wants to put you in that position is a lender that you should run away from, fast and furious. They do not have your best interests in mind, only their profit. Those lenders will also, generally speaking, charge you at a higher interest rate than a typical mortgage. This leaves you in the position of having too much debt and paying too much for it. Neither of those situations is good for you in the long run.
You can learn more about the homebuying process by taking our Homebuyer Education Classes. Call our office for more information!
Often times a bank will look at two numbers when they are trying to determine how much home you can afford. They will make sure that you are not spending more than 29% of your income on your mortgage payment. They will also make sure that you do not have debts totalling more than 41% of your income. These numbers are not set in stone, but they are general guidelines. A person with more than 41% of their income in debt can still qualify for a loan if their credit history and credit scores are very good. It is up to the lender to decide what those exact percentages should be based on your situation.
At the same time, however, you need to be careful that you don't accumulate too much debt. Taking on a mortgage that will put you over the 50% debt figure will be a bad thing, regardless of how much money you make. Any lender that wants to put you in that position is a lender that you should run away from, fast and furious. They do not have your best interests in mind, only their profit. Those lenders will also, generally speaking, charge you at a higher interest rate than a typical mortgage. This leaves you in the position of having too much debt and paying too much for it. Neither of those situations is good for you in the long run.
You can learn more about the homebuying process by taking our Homebuyer Education Classes. Call our office for more information!
Thursday, August 04, 2005
Spanish Homebuyer Education Class
The Rockford Area Affordable Housing Coalition will be offering our half-day MGIC homebuyer education class in Spanish on Saturday, August 13th. Please call our office at 815/962-2011 for more information.
Tuesday, August 02, 2005
The Importance of Good Credit
I took a few minutes to pull my personal credit report yesterday. There are three national credit reporting agencies, and federal law allows people to pull one credit report from each company every year without charge. It is wise to request your credit report from each agency every year, but do each request four months apart. This gives you the opportunity to get a free credit report every four months. If something shows up that is out of place, get it dealt with through the credit reporting agency. There are federal regulations that impact how quickly they must respond.
What happens if your credit is already horrible? Let's face it, the past is the past. No one has figured out how to go back in time to change things, but the past is not the future. The best way to take care of credit issues is to pay off your debts. You may have to do this slowly, but make sure you are doing it. Many experts recommend that you pay off one credit card at a time, while paying the minimum balance on the rest. Some say to pay off the highest balance card first to save on interest. Others say to pay off the lowest balance first for the psychological value of seeing a debt disappear. Either way, start paying them off. Next, make sure you don't accumulate any additional debt. Paying off one debt just to gain another doesn't help you at all. Over time, lenders will see that you are doing the hard work of dealing with your credit issues. Your credit scores will also start to rise.
Remember, credit issues are not easy to deal with. It requires work. Stick with it. If you need help, get it. There are a number of places where you can get help. The Rockford Area Affordable Housing Coalition is one of those places. If you need more help than we can provide, we will be happy to refer you to agencies that handle more significant credit issues. We will not sell you a product, and our counseling sessions are free. Give us a call!
What happens if your credit is already horrible? Let's face it, the past is the past. No one has figured out how to go back in time to change things, but the past is not the future. The best way to take care of credit issues is to pay off your debts. You may have to do this slowly, but make sure you are doing it. Many experts recommend that you pay off one credit card at a time, while paying the minimum balance on the rest. Some say to pay off the highest balance card first to save on interest. Others say to pay off the lowest balance first for the psychological value of seeing a debt disappear. Either way, start paying them off. Next, make sure you don't accumulate any additional debt. Paying off one debt just to gain another doesn't help you at all. Over time, lenders will see that you are doing the hard work of dealing with your credit issues. Your credit scores will also start to rise.
Remember, credit issues are not easy to deal with. It requires work. Stick with it. If you need help, get it. There are a number of places where you can get help. The Rockford Area Affordable Housing Coalition is one of those places. If you need more help than we can provide, we will be happy to refer you to agencies that handle more significant credit issues. We will not sell you a product, and our counseling sessions are free. Give us a call!
