Tag: Finance

Brexit and US Mortgage Rates

The Effect of Brexit on Mortgage Rates in the United States

JS Realty Interest Rates brexitOn June 24, 2016, England voted to leave the European Union. This historic decision, referred to as “Brexit”, has caused a ripple effect here in the United States. It has driven interest rates down to their lowest mark in three years. Mortgage interest rates will fluctuate most directly due to the cost of mortgage backed securities. When mortgage bond prices go up, interest rate tend to fall and when mortgage bond prices drop, mortgage rates will rise. In addition to this correlation, the overall US economy will also influence mortgage rates.

GJS Realty Opposite directions brexitenerally speaking, when the economic indicators such as the stock market, inflation, and unemployment are positive, mortgage interest rates will rise. When the economic indicators suggest our economy is not prospering, rates will drop.

In December of last year, the Federal Reserve projected that it would raise interest rates up to four times in 2016. On June 15, 2016, Federal Reserve Chairperson, Janet Yellen decided NOT to raise rates. This was due to a very weak employment report in May.

Brexit has caused severe volatility in the global stock markets and has had a negative impact on the stock market here in the United States. No one knows what the long term impact of Brexit will be, but it is safe to say that the immediate impact of England’s decision to leave the European Union has directly led to lower interest rates.brexit

If you are considering buying a home, or if you currently have a mortgage and are considering a refinance, right now is a perfect time to get a mortgage loan evaluation from a licensed mortgage professional.

Not sure where to start? Click here to contact Senior Loan Officer Keith Harris or to get pre-qualified.

Keith Harris at Intercoastal Mortgage Company
NMLS ID # 838973
Company NMLS ID # 56323
(www.nmlsconsumeraccess.org)
Intercoastal Mortgage Company is an Equal Housing Lender.

WHAT IMPACTS A CREDIT SCORE

How does my credit score affect my mortgage loan application?

Today we will look at credit reports for a potential mortgage borrower, what impacts the score, and how to improve your score.

When a lender runs a credit report on a potential borrower, there are three National Repositories that will report a credit score. They are:
1. EquifaxJS Realty Credit Equifax Experian TransUnion
2. Experian
3. Transunion

Most lenders will use the middle of the three credit scores to determine what type of loan and what interest rate a borrower qualifies for. Generically speaking, the higher the score, the lower the interest rate a consumer will be offered.

JS Realty approved creditThese three reporting entities will provide a credit score that is used to determine the risk associated with a particular borrower regarding repayment of the loan. A number of credit related variables are used to calculate the credit score. The credit score is used as a predictor as to the likelihood that the consumer will have late payments in the next 24 months. The lower the score, the greater likelihood that the borrower will be late on a payment or payments.

What are the variables that have the greatest impact on the credit score and their relative weight in the scoring?

JS Realty credit score variablePast Payment History – 35%
 -Late payments are shown for payments that are 30, 60 and 90 days late.
Current Account Balances – 30%
-Any account that has a balance of greater than 30% of the available credit limit will reduce the credit score. Balances of more than 50% will result in even lower scores.
Credit History – 15%
-How long have you had the account? Typically, the longer the better.
New credit cards will lower your score at first.
-Closing out an account will have a negative impact on your score.
Types of Credit – 10%
-The most heavily weighted type of credit is those with finance companies
Credit Inquiries – 10%
-Too many inquiries will result in lower scores

The following table will provide information on the length of time that your credit will be impacted by certain events.

JS Realty creditPayment History………….7 years(Date of last activity)
Collection accounts………7 years(Date of origination)
Judgments………………..7 years (filed)
Chapter 7………………10 years (entry)
Chapter 13……………….7 years (entry)
Inquiries………………….2 years /90 days
Tax Liens…………………7 years / (PAID)

By law, there are some factors that cannot be used in the scoring model.

Race/NationalityJS Realty Credit Ethnic
Gender
Age
Religion
Marital status/Sexual Preference
Employment/Length of Employment/Position or Title
Income
Address
Interest rate charged on a particular credit card

In summary, to receive the highest credit scores, you should have 3-5 credit lines that you pay on time and keep a balance of less than 30% of the credit limit. Spread out the use of multiple cards so that you have a low balance on all of them.

Please feel free to contact me if you are interested in learning more about how to increase your credit score or if you have any questions regarding credit and/or mortgage loans.

JS Realty Keith Harris
Keith Harris
NMLS # 838973

 

Keith Harris
Senior Loan Officer
Intercoastal Mortgage Company
Direct: (703) 259-0788
Cell:    (703) 395-6601

 

JS Realty Free Analysis Contact UsThe JS Realty Team – not only serving Brambleton, serving all of Northern Virginia.