How Can I Increase My Credit Score?
While it is difficult to increase your score over the short run, here are some tips to increase your score over a period of time:
Pay your bills on time. Late payments and collections can have a serious impact on your score.
Do not apply for credit frequently. Having a large number of inquiries on your credit report can worsen your score.
Reduce your credit-card balances. If you are “maxed” out on your credit cards, this will affect your credit score negatively.
If you have limited credit, obtain additional credit. Not having sufficient credit can negatively affect your score.
Can My Loan Be Sold?
Your loan can be sold at any time. There is a secondary mortgage market in which lenders frequently buy and sell pools of mortgages. This secondary mortgage market results in lower rates for consumers. A lender buying your loan assumes all terms and conditions of the original loan.
As a result, the only thing that changes when a loan is sold is to whom you mail your payment. In the event your loan is sold you will be notified. You’ll be informed about your new lender, and where you should send your payments.
What’s The Difference Between A Conventional Loan And An FHA Loan?
Loans where the borrower’s down payment is less than 20% often require mortgage insurance, which can be provided privately or publicly.
Conventional loans requiring MI are insured by private mortgage insurance. FHA loans are those whose MI is provided by the Federal Housing Administration, a public, government program backed by taxpayers.
Both mortgage insurance options have premiums, usually paid by the borrower. Each program has advantages and disadvantages depending on your unique situation.
What Documents Will I Need To Have To Secure A Loan?
This checklist outlines the principal documents and information that are generally required to complete the application. Additional documentation may be required, depending on the circumstances of your loan. By having the information available, you will save time and avoid delays.
- Copy of Purchase Sales contract or Offer to Purchase and all addenda (signed by buyer and seller)
- Past 2 years’ tax returns and W-2s
- Past 2 years’ employment history
- Last 2 consecutive paycheck stubs
- Name, address, and phone for past 2 years’ residence(s) and landlord(s) (if renting, evidence of 12 months’ rent payments)
- Last 2 months’ statements for savings, checking, CD, money market accounts, etc.
- Recent statement on retirement accounts (IRA, 401k, 403-B, Annuity, etc.)
- Monthly payments and balances on all open accounts
- Proof of all additional income
- Divorce Decree (if applicable)
- Bankruptcy schedules/Discharge papers (if applicable)
Additional information that may be required:
- Estimated market value of assets, such as autos, furniture, personal belongings, etc.
Be prepared to discuss where the money for closing will come from, including down payment and closing costs
How Will My Monthly Payments Be Calculated?
How much you will pay each month will depend a lot on the term of your loan. Most mortgages are either 30-year or 15-year terms. Longer term loans require less to be paid back each month, whereas shorter terms require larger monthly payments, but pay off the debt more quickly.
Most monthly payments are based on four factors: Principal, Interest, Taxes and Insurance, commonly referred to as PITI.
Principal: This is the amount originally borrowed. A portion of each monthly payment goes to paying this amount back. In the beginning, only a small fraction of the monthly payment will be applied to the principal balance. The amount applied to principal will then increase with each payment, and in the final years most of the payment is applied toward repaying the principal.
Interest: To take on the risk of lending money, a lender will charge interest. This is known as the interest rate, and it has a very direct impact on monthly payments. The higher the interest rate is, the higher the monthly payment.
Taxes: While real estate taxes are due once a year, many mortgage payments include 1/12th of the expected tax bill and collect that amount along with the principal and interest payment. This amount is placed in escrow until the time the tax bill is due. Borrowers may be able to opt out of escrowing this amount, which would reduce the monthly payment, but also leave them responsible for paying taxes on their own.
Insurance: Insurance refers to property insurance, which covers damage to the home or property, and, if applicable, mortgage insurance. Mortgage insurance protects the lender in the event of default and is often required in cases where borrowers have less than 20% equity in the home. Flood insurance may be required if property is deemed to be located in a flood hazard area.
Should I Pay Points?
The best way to decide whether you should pay points or not is to perform a break-even analysis:
- Calculate the cost of the points. Example: 2 points on a $100,000 loan is $2,000.
- Calculate the monthly savings on the loan as a result of obtaining a lower interest rate. Example: $50 per month
- Divide the cost of the points by the monthly savings to come up with the number of months to break even. In the above example, this number is 40 months. If you plan to keep the home for longer than the break-even number of months, then it makes sense to pay points, otherwise it does not.
Which Communities Do You Service with Mortgages?
PeoplesBank can help you find a competitive mortgage product and interest rate, combined with personal attention for any home purchasing, building or refinancing need in Pennsylvania or Maryland.
If you’re looking to buy a home in any of the following counties listed below, consider starting your mortgage pre-qualification process with PeoplesBank.
- Adams County
- Cumberland County
- Dauphin County
- Lancaster County
- York County
- Anne Arundel County
- Baltimore City
- Baltimore County
- Carroll County
- Cecil County
- Frederick County
- Harford County
- Howard County
- Washington County
Should I Refinance?
Find out if you can save money by refinancing your existing loan at current interest rate levels.
While a lower interest rate will mean lower monthly payments and less total interest, a refinance will also mean paying closing costs and, in some cases, points. If the monthly savings exceeds these closing costs, refinancing is a good option.
What Is A FICO Score?
A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. Credit scoring is widely accepted by lenders as a reliable means of credit evaluation.
Credit scores analyze a borrower’s credit history considering numerous factors such as:
- The amount of time credit has been established
- The amount of credit outstanding versus the amount of credit available
- Length of time at present residence
- Negative credit information such as bankruptcies, charge-offs, late payments, collections, etc.
To obtain a copy of your credit report, please visit www.freecreditreport.com.
Where Do I Send My Tax And Insurance Bills If I Have An Escrow Account?
If PeoplesBank is currently servicing your mortgage, please send to:
PeoplesBank, A Codorus Valley Company
Attn: Loan Services Department
2595 South George Street
York, PA 17403