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Tip of the Month |
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| Know What's In Your Credit File
When it comes to your credit file, it's what you don't know that could hurt you. Mortgage companies check your credit file to find out about your payment history, and even small errors could cost you large amounts of money in the long run. So when you get your credit report, it's important to review it carefully! If you see anything thatís wrong or that you forgot about, such as an unpaid bill, you should act right away to address it.
Check to make sure there are no accounts you didn't open, balances you didn't make, and delinquencies you didn't cause. If you see evidence of fraud, contact Equifax immediately. Explain the situation and ask that a fraud alert be placed in your file.
Make sure your credit report is accurate by looking for the following:
• Incorrect or incomplete personal information (name, address, etc.)
• Accounts that you never opened
• Accounts that you've closed but appear open and do not list "closed by consumer"
• Accounts with inaccurate histories (e.g. payments listed as "late" when you know they were on time)
• Negative credit information exceeding seven to ten years from the date of last acticity (depending on the item)
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Home Buying: Your Credit and What It Means |
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A home is the largest purchase that the average person makes in a lifetime. Whether you're currently in the market for a home or planning to buy in the future, it's never too early to understand how your credit can affect the home buying process. While the steps to buying a home can be overwhelming at times, remember – you've already taken the first financial step by showing commitment to your credit and fiscal wellbeing through Equifax.
The connection between your credit and home buying is a relatively simple one: the credit history you accumulate helps determine the interest rate and terms you're likely to receive on your new mortgage. A higher credit score means that you pose less of a risk to the lender who will, in turn, be more likely to offer more favorable interest rates. While this might not seem that important, a mere 1% increase in interest rates could cost you thousands of dollars per year!
However, if you have less than perfect credit or a low credit score, don't give up. There are a number of ways you can work to reestablish your creditworthiness. And, while it's true that good credit demands life-long vigilance, it only takes a matter of months or years to make a noticeable difference in your credit score. That's why it never hurts to plan ahead. Even if your dream home is still several years off, you can begin now to understand how your credit score works.
When you're making a conscious effort to get your creditworthiness in shape, Equifax Score Watch™ helps you remain aware of all changes to your score. It also explains what your score means in practical terms. The sooner you learn more about the effect of credit on home buying, the sooner you'll understand how to save a generous sum of money over the course of your mortgage. Get your credit in home buying condition starting today! |
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Customer Know-How |
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Home Buying Glossary
With all of the jargon involved in buying a home, it can be helpful to know the definitions of terms. Never be afraid to ask questions or do extra research–knowledge is your best asset when buying a home.
Down Payment:
The initial amount paid in cash toward the total price of a home. A large down payment–typically 25%–may help you get a more favorable interest rate and let you avoid paying for mortgage insurance.
Home Equity:
The part of your home you actually own, or the home's current market value minus the amount you still owe.
Home Equity Loan:
A loan secured by a primary residence or second home based on the difference between the fair market value and the debt owed on the original mortgage. Interest on a home equity loan may be tax deductible, but if you fail to meet your home equity loan payments, your home could be sold to pay off the debt.
Interest Rate:
The amount charged by a lender for borrowing money.
Loan-to-value Ratio:
The ratio of the amount of a home loan to the appraised value of the home. For example, if you borrow $75,000 to buy a $100,000 house, the LTV is 75%. As a general rule, the lower the LTV, the more favorable the terms of the loan.
Mortgage:
A loan designed to facilitate the purchase of a home, in which the home itself serves as security for the loan. If the borrower doesn't make the required payments on time, the lender may, through a legal process known as foreclosure, sell the home in order to recover the amount owed on the mortgage. "Mortgage" can also refer to the legal document detailing the borrower's responsibilities, including the payment schedule and terms.
Origination Fee:
The fee a lender charges to process a home loan. It may include the costs to check the applicant's credit report, prepare documents, inspect the property, and conduct an appraisal.
Refinancing:
Restructuring your home loan to get a lower interest rate or to borrow money from the amount you've already paid on a loan.
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Featured Product |
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A higher credit score typically means lower interest rates, which reduce your monthly payments–and that could mean saving thousands of dollars over the life of a loan.
Score Watch makes it easy to target your ideal score, see interest rates you are likely to receive and watch your score trend over time.
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Monthly Calculator |
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How Much Will My Mortgage Payments Be?
With all of the factors that go into a mortgage–from the term of the loan and interest rate to your taxes– it's hard to determine what your monthly payments will be. Equifax has made it easy to find out with our helpful Mortgage Calculator. Simply input the loan amount, the appraised value, the term of your mortgage, the interest rate and expected yearly property tax and insurance. At the click of a button, you'll find out your estimated monthly payment and how it breaks down between principal and interest, taxes and insurance, and private mortgage insurance.
There are also helpful graphs and tables that make your mortgage payments easier to understand. See how much of your payment over the years goes toward the principal or interest. Similarly, a table of your annual schedule of payments helps you see where your money is going. Learn more about the breakdown of your mortgage payments–as well as the importance of your interest rate and your credit score's effect on it–all with our easy calculator.
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Equifax is pleased to provide this newsletter for your convenience. However, this newsletter is provided for informational purposes only and does not constitute professional or legal advice of any kind or description. Equifax's credit monitoring products are protected by US Patent 7,028,052.
Equifax is a registered trademark of Equifax Inc.
If you have any questions, please call us at 1-800-829-3616, 8:00AM - 3:00AM (EST), 7 days a week.
You may e-mail us anytime at customer.care@equifax.com. Or you can write us: Equifax Consumer Services, LLC. PO Box 105496, Atlanta, GA 30348.
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