As we grow older, we become more focused on our finances. It is inevitable that this is going to happen since we are thinking not just for our futures but also, for the future of our loved ones. Millennials are growing families and settling down, while the baby boomers are setting themselves up for a comfortable retirement. Mortgage rate can affect both generations and unless you know the basic facts about credit scores, chances are you’ll be paying more than necessary.
What affects credit and what are the negative impacts?
If your credit rating is in the green, you have done pretty well. You have to be a pretty organized individual (unless you have had help from an accountant) to stay in control of what is going in and what is coming out of your bank every month. The darker the shade of your credit rating, such as red, the worse it is.
Let’s take a look at the things that can have an effect on your credit score:
– Making late payments
– Failure to make payments
– Taking out multiple loans/credit cards and failing to make payments.
When a lender looks at your credit score, they may dismiss your request to finance with a mortgage immediately. The reason for this is because you will look unreliable and will be untrustworthy for repaying in a timely manner. This is not to say that you will be turned down completely, but you will have to prove your borrowing capability to be reconsidered.
Advantages of Financing with a Mortgage
If you have discovered that your credit score is not so great, you can consider an alternative financing option. Whichever route you go down, you would be wise to absorb the pros before looking at the cons.
Here are the upsides associated with this mortgage financing option:
– Home ownership is made affordable.
– It is a cost-effective form of borrowing for mortgage financing.
– Take advantage of lower interest rates.
– Convert a variable loan rate to a fixed one.
Disadvantages of Financing with a Mortgage
Although there are advantages associated with financing a mortgage that you ought to be aware of, it is equally as important that you familiarize yourself with the disadvantages.
Here are the downsides associated with this mortgage financing option:
– The fees you pay for mortgage refinancing can cause your savings to reduce quite rapidly, depending on the lender and the circumstances.
– There is a chance that you will not be accepted if you do not meet the standard lender criteria.
No matter how bad your lending and credit history is, remember that there is always a solution. You can accomplish a number of new lifestyle-changing tasks that will contribute to your lending ability, such as paying back debts to overdue lenders, calculating your monthly mortgage payment, spend less, save more, and don’t bury your head in the sand.