One, if not the, most important factors in determining what kind of mortgage you qualify for is your credit score.  The problem is that how the credit score is calculated can be a bit confusing.  The scores can range from 300 to 850. Now while the formulas used to calculate a credit score are proprietary information, here is an approximate breakdown of what makes up your credit scores:

1. 35% of your Score is Payment History. This includes late pays, collections, bankruptcies, & foreclosures.  Additionally, the more recent derogatory credit is, the more it affects your score.
2. 30% of your score is based on your outstanding debt.  How much do you owe on loans cars or homes?  What percentage of your revolving credit accounts are in use?  General trigger levels are 30, 50 and 70% of your credit limits.
3. 15% of your score is based on your length of credit history.  The longer you’ve had the accounts, the better.  A common mistake people make is closing credit cards after they pay them off.  If it is an old account, this can drastically lower your average length of credit history.
4. 10% of your score is based on new credit.  Opening new credit accounts temporarily lowers your credit score.  This is to prevent a run of opening up excessive credit before history with new accounts can be established.  This also includes hard inquires (inquires you authorize).
5. 10% of your score is based on the types of credit you have.  It is good to have a balanced mix of both revolving account (credit cards) and installment loans (Car loans & Mortgages).  This shows you know how to manage all types of credit.

There are three separate credit bureaus Experian, Equifax and TranUnion.  They each use their own variation of the Fair Isaac credit model. (This accounts for some of the variations in each score).  Additionally, creditors can choose to report payment history to one, two or all three credit bureaus.

Over the last couple of years, the government has made many attempts at trying to help home owners keep there homes.  Many of these attempts have been disappointments at best or all out failures at their worst.  There are a couple of programs though that are working to help home owners lower their mortgage payments, and get them into good, stable 30 year fixed mortgages.  The two programs I speak of are the DU Refinance + and the Freddie Mac Open Access and they are part of the Making Home Affordable Program.  These two programs are designed for home owners who have seen a decline in their properties value, but have still kept making their payment on time.

Here is a brief synopsis of how the program works and what is required to qualify for it.  These loan programs will allow a home owner to refinance their 1^st mortgage into a 30 year fixed mortgage without mortgage insurance, even if their new first mortgage is more than 80% of their homes value (up to 125% of the homes value).  You have to qualify the same way you would with a regular refinance and the rates will (in many cases) be similar to what you would get if you were refinancing with an 80% loan to value (LTV).  There are two main requirements for this program though.  First, your loan must be serviced by Fannie Mae or Freddie Mac.  To check this go to the website http://www.makinghomeaffordable.gov/loan_lookup.html and follow the links.  Remember too that just because you are not making your monthly payment to Fannie or Freddie, doesn’t mean they aren’t the servicer.  Either check the website above or give the Kunselman Team a call and we can look it up for you.  The second qualifying factor for this program is that your original first mortgage had to be for less than 80% of the homes value at the time you got the mortgage.  So if you have had or currently have mortgage insurance on your mortgage, you don’t qualify for this program.  That being said, there may still be options for you as long as you have not missed any of your payments.  You are allowed to have a 2^nd mortgage on the property (this is perfect for all of you who got an 80/20 when you bought or refinance) as long as the existing 2^nd mortgage company is willing to re-subordinate their mortgage.  You cannot get cash out on this refinance but you can save a lot of money by lowering your interest rate.

The Kunselman Team has helped many home owners with these amazing programs, and have lowered some peoples interest rates by over 1.50%.  The Making Home Affordable Programs are shining diamonds in the trash pile of the many failed government programs out there and while it won’t work for everyone, it may just work for you.  So give The Kunselman Team a call to see if you qualify and take advantage of the low interest rates before they go up.

Interest rates for mortgages over the last 6 months have been amazing.  Most borrowers have been able to get rates in the low 5% without paying any points or high 4% if they wanted to pay some points.  There is a lot of speculation in the market right now about what is going to happen with rates.  There are really only two arguments, rates are going to go up or rates are going to stay the same.  Here is the basis of both of these arguments.

Rates are going to go up:
Rates have been kept artificially low over the last year.  The government has been investing billions if not trillions of dollars into the purchase of mortgage backed securities.  The government has only committed to buying mortgage backed securities through the end of the first quarter of 2010.  This news raised a lot of chaos in the market toward the end of last year.  Rates stepped up about a half of a percent on this news.  The government cannot continue to keep purchasing more and more of these securities.  If they do, the value of the dollar will continue to go down as well as the risk of another housing bubble.

Rates are going to stay the same:
The government has spent the better part of two years attempting to stabilize the housing market.  The most successful aspect of this effort has been the purchasing of mortgage backed securities to keep interest rates low.  If the government stops buying these mortgage backed securities, who will be there to buy them?  The market has not shown a strong appetite for these securities since they first crashed a few years ago.  The only reason that banks are still writing new mortgages is because there is someone buying them on the secondary market.  If the secondary markets disappears, the banks will all but shut down the market.  The government showed the big banks that they would not let them fail and the banks know they hold all the cards.  Until a new investor shows up in the secondary market, that wants to buy mortgage backed securities, the US Government is going to be obligated to keep buying them.  Failure to do so would result in another crash of the housing market.

How did 2008 go for you and your friends and family?  If you are like most Americans, you probably saw an increase in your amount of debt and at the same time a decrease in your assets.  Wouldn’t it be great to start 2009 off with a guaranteed plan that could show you the way to put money back in the bank and pay down the principle balances on ALL YOUR DEBT?

The Money Merge Account by United First Financial is a proven money management system, with over 50,000 clients, that can show you how to maximize every dollar you earn, why minimizing any interest that you are paying to your creditors.

Now, the Money Merge Account is not a system that works for everyone but the people at United First Financial are always working diligently to figure out new ways that more people can qualify for this amazing program.  So stop wasting time and give us a call to see if you qualify to start saving tens of thousands, if not hundreds of thousands of dollars!

Check out www.DebtFreeLongmont.com to learn more about this amazing program!