Author: vmfhomesblog

How Escrow Accounts Work

On By vmfhomesblogIn Financial, Homebuyer Education

If you have a mortgage, then chances are you’ve heard the word escrow thrown around a time or two. But what is it exactly?

An escrow account is a helpful tool built into your mortgage. It allows for funds to be collected monthly to pay for your homeowner’s insurance and/or property taxes. By your mortgage collecting escrow, it ensures that your insurance and property taxes are paid in a timely manner. The benefit to you is you don’t have to worry about fronting hundreds or thousands of dollars all at once for your homeowner’s insurance or property taxes.

The formula is typically simple for finding the amount owed. Let’s say both insurance and taxes are escrowed from each monthly payment. The monthly payment is found by taking the total amount paid to both insurance and taxes for the year and then divided by 12. (The 12 is for 12 months.) That’s it! That would be your monthly payment in addition to your mortgage! Please keep in mind, some lenders may use another calculation that varies slightly and is also permitted by the law. Be sure to contact your lender if you have further questions as to how your escrow is calculated.

Occasionally, your escrow payments may increase or decrease. If that happens, either your insurance or taxes have changed. This will affect what you pay monthly. In most loan types, this is the cause of increase or decrease for monthly payments.

All in all, escrow accounts allow for your insurance and property taxes to be paid on your behalf without much extra work on your end!

What is Escrow_ (2) Final final

Researched and created by Rachel Mersinger

Take This Graphic With You!

5 Surprising Facts About Credit You May Not Have Known

On By vmfhomesblogIn Financial

Learning how credit scores work can be a little challenging sometimes, especially if you are new to credit or building it for the first time. Building your credit should have some strategy as there are some rules on how to do it well. If you’re hoping to fine tune your credit, but haven’t seen growth in a while, you may be missing some lesser-known surprising facts. We’ll help you uncover some below!

1.Paying off or canceling a credit card can drop your score.

Canceling a card or paying off the balance completely can be a great way to reduce debt, however it may not reflect positively for your credit. Canceling your card can reduce your credit utilization which acts as the available credit you can use as a percentage. While keeping your utilization low can be good for your score – zeroing out is not. Additionally, the age (length of credit history) and types (credit mix) of your credit accounts are reduced when you pay off debt, so those are other factors that play into a dip in your score.

2. Having no credit is like starting at zero and it takes some time to build.

It may be difficult to finance the purchase of a car or home without a credit score, unless you have a cosigner. It’s not like having a low score where you have some possibility of approval. When you apply for a loan without any credit history, your lender has very little to base your financial repayment ability off of. That’s okay though! We have to start somewhere. Keep in mind, you can be great with money and have no credit.

It takes about six months of credit activity to generate a score, so keep that in mind when starting. It will take longer to get it to a higher score level, so just keep at it!

3. Having a high credit balance likely hurts your score.

This one shows us the flip side of #1, where if your credit utilization is above 30 percent, it can impact your score negatively. Essentially, a high balance could appear to lenders as you not having the funds you need so you have to charge your card. While this often isn’t the case, it’s how the numbers can be interpreted. This affects your amounts owed, which also makes up 30 percent of your credit score.

person looking at credit card info on their cell phone

4. Our current credit scoring system began in 1989.

Credit started commercially in around 1841 with the first reporting agency, the Mercantile Agency. This model of credit was “used by merchants to see the creditworthiness of potential business customers” In the 1960s, financial institutions began using computerized credit scoring, marking a shift toward the more individual creditworthiness system used today. In 1989, the model we know today was built in which consumers could be scored more equally.

5. Credit Cards Offer Safety When Purchasing Online.

Credit cards can be a secure way to purchase something online. Plus, if someone does illegally obtain your credit card number, unauthorized payments can be relatively easy to stop and do not usually end up compromising as much as a stolen check or debit card. Now there are even ways for your card to be further encrypted to ensure even more safety. So next time you shop online, charge it, then pay it off!

We hope you’ve learned at least one new thing from reading this. Your credit score is a measurement used to assess your financial tendencies. However, it isn’t the only marker of your financial success, don’t get discouraged it takes time to learn the ins and outs.  Sometimes it can get a little confusing, but if you’re willing to blend your financially savvy and learn the dos and don’ts of credit, you can find a winning combination.

Keep Your Eye on Your Credit Report

woman sitting looking at a computer and talking on her phone.

6 Questions to Ask of a Mortgage Lender

On By vmfhomesblogIn Financial, Learn

Searching for a new home can be a fun challenge. Finding a way to finance your home shouldn’t add to the stress, however it can because sometimes homebuyers aren’t sure what questions to ask. As a first-time homebuyer, you’ll really want to focus on asking the right questions to your real estate agent (if you have one), potential financing companies offering loans, and the seller of the home you’re purchasing. As a repeat buyer you may know the ropes, but these questions could still benefit you greatly.

When looking for a mortgage company or potential lender, you will want to make sure they are a good fit for you! Below are some suggestions for questions to ask when shopping around for your mortgage:

  • How long are your loan terms and what terms do you offer?

The lifetime of a mortgage is important to know when you begin. Often homebuyers may expect a 30-year loan term. However, depending on the lender there can be a handful of options. The length of your loan will likely impact your monthly payment, interest, etc. You’ll also want to know this to see if there’s any penalty for early pay off in case that’s something you want to do. Some people choose shorter mortgage terms or early pay off to cut interest.

  • What are your current rates?

While interest rates are mostly determined by the Federal Reserve and the demand for notes and bonds (depending on the rate in your loan), banks also play a role in what they offer based on what’s best for business and the current market.  When it comes to individual lenders, they will offer you their specific rates (which are based off your credit score). There are many sites now that will let you compare ballpark rates to help you get a general idea. For exact rates, you do have to apply. Depending on the lender, they may also share a rate range with you without applying.

  • Would the rate be a fixed rate or an adjustable rate?

This will depend on what’s offered. You may come across lenders who don’t offer both. Your fixed rate is what it sounds like, fixed for the lifetime of your loan (unless you refinance). Adjustable rates can go up and down based on amortization. You’ll weigh what option fits you best. Whether locking in a low-rate works, or if purchasing at a higher rate for the possibility of movement is better – the choice is yours.

Someone is counting out cash and has a budget sheet and calculator out.
  • What are the down payment requirements?

This question is pivotal for many homebuyers. Often what you must put down makes or breaks you being able to purchase at a certain time. Lenders will usually be able to tell you what percentage of the down payment they require after you apply. This also depends on your credit score and the specific mortgage option you’re selecting. In some cases, the type of loan will require a specific down payment amount.

  • Do you finance for mobile or manufactured homes? (Not all lenders will so it is important to ask ahead if you are planning on purchasing one)

If you are hoping to finance a manufactured home, it will depend on the lender. While manufactured home loans can be set up similarly to site-built homes loans, they do differ depending on if land is involved. Because there are specifics that relate to a manufactured home, you’ll have to find a lender who specifically does loans for them.

  • What is your turn around time for closing?

If you need to be in or out of a home quickly then the closing timeline may be quite important to you. It really ranges as there are so many variables. However, lenders should be able to give you a ballpark once they know your specifics. If the timing doesn’t impact you that much, it will still be a great planning tool for you.

This list may not be all inclusive to every question a homebuyer may have, but it is a good start for those not knowing where to begin! We hope this helps to get you thinking in the right direction.

Additionally, keep in mind credit bureaus allow you to shop around for mortgages. This means 14 to 30 days after your first application for a mortgage, the bureaus allow you to apply to multiple entities (provided they code this as a “mortgage” with the bureaus). The first time you apply will show as a hard inquiry and drop your credit score, but up to 4 more within that timeframe will only show as a soft inquiry which means it won’t lower your credit score. Be sure to verify this when you are applying.

Happy shopping!

blue backsplash in a manufactured home kitchen

Using Your Tax Refund as a Home Investment

On By vmfhomesblogIn Featured, Financial, Homeowner Maintenance

If it’s a tax season where you are getting a refund instead of having to pay or breaking even: congrats! If not, be patient, your season could be soon. Don’t get discouraged. The best option is usually to save instead of spend. However, tax refunds can be an exception because most people don’t budget them in. If you can, consider setting aside part of your refund to a savings account, outstanding bill, or high interest payment. Those are typically the best places to start.

Another great option if you’re in the market for a home is to consider using your tax refund towards your down payment. Down payments can deter some buyers from purchasing a home. However, using your tax refund could get you into your home quicker and may alleviate the need to pull from your savings. That’s a win-win!

After that, if you’ve got a little left over, you might consider showing your home some love with some of these upgrades listed below! Making an investment in where you live can pay off in the future. Skip the instant gratification and invest where it counts. Based on what amount you have left over we’ve outlined a few home improvement ideas by cost. Ideas are just estimates and will vary due to several factors, such as home size and the supplies used.

Most of the estimated project costs below are considering the cost of labor (for the ones that need that). If you plan to do the work or install – you could spend less!

Less than $300

Update light fixtures

Painting kitchen cabinets with a kit

Replace door knobs

Pressure wash

Programmable thermostat

$300 – 600

New dishwasher

Add kitchen backsplash

Add a new screen door

$600- 1,000

Entire home storage/organization

Adding updating landscaping/curb appeal

Replace garden tub or standing tub/shower

$1,000 – 1,500

Replace carpet in entire home

Build a shed

We hope this inspires you to try some updates in your home that add to your investment. We’ve tried to highlight upgrades that we think will make your home valuable and/or look better in the future.

Try a Project For Your Home!

Pre-qualification, Pre-approval, and What You Need to Know

On By vmfhomesblogIn Financial, Learn

Both pre-qualifications and pre-approvals are indications of what a bank or creditor may be willing to lend but are not loan guarantees. The most important aspect is that they show the seller you are serious about buying while giving you an idea of what you may be able to borrow. Both processes will vary depending on the lender that you select. Before you request a pre-qualification or pre-approval, be sure to ask your lender about how the process will flow, potential associated costs, whether your credit report will be pulled and if documentation will be required. Ask for a list up front so you can know exactly what you’ll need to provide.

Pre-qualification

What: A letter from a lender that says you will likely be able to get a mortgage loan up to a specified amount

Who: A bank, credit union, or financial entity writes a pre-qualification for you. Which means they are looking at your debts and income to decide your credit worthiness.

When: Usually this is the first thing a homebuyer does when looking for a home

Cost: Free (usually)

Where: Online or over the phone (depending on entity)

Why: Potential homebuyers use this to see how much of a home they may be able to afford, or in some cases if they can afford a home. This appeals to sellers because it shows them as a buyer you are serious and can get the loan you need to purchase the home.

What you’ll typically need to provide: Usually potential lenders will look into your debts and income. Lenders usually pull a credit report to evaluate before they write the pre-qualification.

Pre-approval

What: A letter that tells you what a lender is willing to lend you based on financial documentation you provide. Looks at financial history, income, and stability.

Who: A bank, credit union, or financial entity works on a pre-approval for you. Which means they are looking at your bank statements, proof of income, credit, employment, and personal documentation.

When: Usually done right after a green light on a pre-qualification, the next step, some lenders may skip pre-qualification and go straight to pre-approval.

Cost: Varies (but usually a cost is involved for application)

Where: Online or over the phone (depending on entity)

Why: It’s more sound than a pre-qualification because approvals are based on proof of financial status and often evaluated by an underwriter. Can usually provide info about mortgage types and possible interest rates.

What you’ll typically need to provide:

  • W-2 from last 2 years (proof of income)
  • Bank statements (assets)
  • Credit score
  • Pay stubs (proof of employment)
  • Driver’s license
  • Social Security # (personal documentation)

Learn More About the Mortgage Process

Advice from Homeowners to Potential Homebuyers

On By vmfhomesblogIn Featured, Homebuyer Education

When we asked some homeowners what they wish they’d known before they purchased a home, we found a theme: researching and understanding the responsibility behind owning a home. Get started with the advice below –

With the internet providing unlimited resources – we have the opportunity to be very informed buyers. However, that also means we might get some bad or inaccurate advice. Therefore, it is wise to be thorough in conducting your research. Ask parents and peers and don’t be shy in calling mortgage companies and asking questions.

Also, it’s good to be prepared for the pitfalls of owning a home. Repairs and updates to a home shouldn’t deter you from owning a home, but you need to have an idea of the cost and time you’ll be spending to keep your home in good shape.

Check out mobile home options!

Manufactured home with steps leading to the front door.

Research:

General –

  • Read blogs, check Pinterest and Google
  • Research the builder of the home you want to purchase. Read reviews. Check into negative reviews if there are any. Compare them to other builders.
  • If safety is a priority to you, check crime rates in the area you would like to live in.
  • If you have kids – look into the school districts and what they offer.

Home Specific –

  • Ask if the title is clear.
  • See if an escrow account for payment of taxes and insurance is available or required through your lender.
  • Check into interest rates and compare them, also see if it’s a fixed rate that will not change during the term of the mortgage.
  • Find out what the estimated annual homeowner’s insurance and property tax payments will be.
  • Look into the history of home and lot in the public land records.

Responsibilities:

Think you’re ready to make a home purchase? Dig into these first-time homebuyer resources as a next step! Have your own homeowner advice? Interested in something specific? Email us your input at facebook@vmf.com!

How to Apply for a VMF Home

On By vmfhomesblogIn Financial

Applying for a mortgage can feel overwhelming, especially if you haven’t done it before. Vanderbilt Mortgage offers financing* on select homes on VMFHomes.com inventory. VMF has 3 main user-friendly application options that can help you feel at ease: over the phone, online; or paper/by mail. I want you to feel ready and prepared when filling out an application. Before you get started, here are some things you will need to have on hand for you and anyone else applying with you:

  • Social Security Number(s)
  • Current Email Address(es)
  • Gross Monthly Income(s) (generally the amount of money you have earned before your taxes and other deductions are taken out)

Over the Phone
Doing an application over the phone can help you feel more comfortable as you start the process. It can be helpful to have someone who is a licensed loan specialist to answer your questions as you go through the application. This option can also feel more convenient for some applicants.

You can call 888-508-2373 or when you are speaking with our sales team, you can request to have a licensed loan specialist take your application over the phone. Typically, we schedule these application times so that you can be prepared and know when to expect our call.

Online
If VMF offers financing for a listing on VMFhomes.com, you’ll see a green button in the lower right-hard corner that says, “Apply Now.” If you click that button it will take you to an online application. Make sure you have some time before starting and that you have access to your important documents. Remember, among other things, you’ll need social security numbers, email addresses, and gross monthly income for all applicants.

As you begin the application, you’ll notice that you were directed to VMF.com. You are now filling out an online application specifically for the home you were viewing. However, if you change your mind about that specific home, the application may be converted to use for another home. This is a simple process called a relook that does not impact your credit a second time. You may also fill out a general application that isn’t towards a specific home. Both a home specific and non-specific home application will give you the same results — a max loan amount you could qualify for.

Our online application is user friendly as possible so it can help you apply with confidence.

Paper Application by Mail
You can use paper applications to apply for any home listed on VMFHomes.com that Vanderbilt Mortgage offers financing on. One difference in the paper option versus the phone or online option is the increased time it takes to submit an application because of the time it takes the U.S. Postal Service to deliver the application via regular mail. Therefore, if you aren’t in a rush, or you simply prefer a paper application that you can physically write on – this might be the option for you.

Learn More About Mortgages

We hope this post has provided you with helpful information. If you have questions or want to make an appointment to fill out a phone application call 888-508-2373.

*All loans subject to credit approval

Understanding How Your Credit Can Be Good News for Your Interest Rate

On By vmfhomesblogIn Financial, Homebuyer Education

So you’re taking on a mortgage, or considering it – congratulations! Also, good job. Educating yourself in financial matters is super smart (though seriously daunting and intimidating sometimes). When it comes to interest rates, it can be easy to dismiss the steps you can take to try and get better rates. However, there are many things you can do before even applying for a mortgage to improve your ability to get a lower interest rate.

It begins with keeping the following in good standing: credit, debt, savings, income, and other assets.

Having a low interest rate is likely going to be important to you in the long run. While a high interest rate may be easy to overlook when purchasing a home, you may feel the financial impact of a higher rate down the road. A higher interest rate will result in you paying more over the lifetime of your mortgage2.

Good credit can result in lower interest rates when you go to purchase a mobile home2. Many people don’t realize how important it is to keep your credit score up or to work on getting into a good credit score range.

When applying for a mortgage or preapproval, it’s also a good idea to keep an eye on your credit report and to promptly correct errors1. You should avoid doing anything that may negatively impact your credit throughout the process of purchasing a mobile home; this includes applying for new, additional lines of credit1.

While your credit score isn’t the only key to a low interest rate, it is one of the key factors2. Your credit report is the main record lenders have of how you spend money. It tells them whether you pay on time, if you pay what is owed, and how consistent you are. It’s riskier for them to lend when your credit score is low in terms of your perceived ability to make payments. It’s similar to a school giving a better scholarship based on grades. While it’s not always fair to those who really have to work for a high grade versus those who are naturally good test takers – both got the same grade. The same is true with credit. If your credit has seen better days, you can improve it with hard work.

Another key factor is your debt1.  A lot of debt may deter a lender from lending to you, or may negatively impact the terms of the loan. Lenders calculate your debt to income ratio, so you definitely want to pay off as much debt as you can before applying for a home loan. Many people only see their home as an investment and not as debt, which it is. A mortgage is probably the biggest loan you will have in your life. Owning a home can be rewarding, but it is also a big responsibility. The best thing to do is either consolidate or pay off debts that you can, or at least have proof that you can consistently pay towards your debt while also making your mortgage payments.

Your savings and income may also impact your interest rate and the terms of our loan.  Starting to save is obviously amazing when considering a mortgage. It also can look good when your interest rate is being decided. Savings can demonstrate to a lender that you can pay your mortgage payments. This can also be shown if you have consistent income. Having a steady job or creating a savings budget could help you when trying for a better interest rate. Assets such as land, cash settlements, etc. could also positively impact that way that you appear to a lender.

Understanding your credit is the key to reaching for a better interest rate. Don’t just accept a high rate. You’ll pay for it later. Do what you can to make your credit shine!

Start Improving Your Credit Today!

  1. Consumer Financial Protection Bureau. 16 August 2018. How does my credit score affect my ability to get a mortgage loan? https://www.consumerfinance.gov/ask-cfpb/how-does-my-credit-score-affect-my-ability-to-get-a-mortgage-loan-en-319/

2. Consumer Financial Protection Bureau. 16 August 2018. Seven factors that determine your mortgage interest rate. https://www.consumerfinance.gov/about-us/blog/7-factors-determine-your-mortgage-interest-rate/

Understanding What Makes Up Your Credit Score

On By vmfhomesblogIn Financial, Learn

Part of accurately building your credit is by understanding it. That begins with a breakdown of the factors that play into your score. The assumption by many is that credit is based solely on our ability to pay back money. While that is an aspect – it’s important to look at the collective.

Let’s elaborate on the 5 components of credit. Below we’ve got some examples to further help explain what each section means. These are made up examples and do not pertain to actual people or advice.

    1. Payment History: How well you’ve done with paying back your charges – based off consistency of repayment. Example: Debbie pays a little over her minimum payment before the due date. 
    2. Amounts Owed: How much you owe compaired your credit limit. Example: Debbie’s credit limit is $500 and she has a balance on her credit card of about $50 at a time. This is 10 percent of her limit, so her ratio of credit to amount owed is pretty low.
    3. History Length: How long you’ve had your credit. Example: Debbie has a credit card that she’s had for about 10 years. It shows over time how she’s used the card and done with making payments.
    4. New Credit: Based off opening new lines of credit. Example: Debbie opened a credit card, got a car loan, and opened a store credit card all in within two months. This could cause her score to drop.
    5. Credit Mix: Diversity and amount of credit lines. Example: Debbie has 5 lines of credit now: a department store credit card, a car loan, a secured credit card, a credit card through a bank, and a major credit card.

Check out This Credit Infographic

Source: https://www.equifax.com/personal/education/credit/score/how-is-credit-score-calculated