It's a new year and time to learn more about the mortgage industry. I am going to concentrate on areas where failure to know and failure to act can cost you money. This is the fifth column of this series and in case you missed any they are "I Didn't Know That - Did You" 9/21/06 , "The Next Seven" 10/18/06, "More things to Know" 11/2/06 and "A Gift of Knowledge For The Holidays" 12/17/06. The series can be read in any order as columns are not built on each other. The more you understand the easier it is for you to procure a mortgage that not only works for you but is as well priced as you can would hope.
We will begin with a look at credit. Credit can cost you if you aren't on top of it at all times.
Do not assume that everything is reported to the credit bureaus correctly and if an institution reports one of your payments incorrectly that they will correct the mistake. It won't happen.
Example. If you make a payment that doesn't fall within the grace period, generally 10 days after the first of the month, or ten days after the due date, you might find that you have a new 30 day late on your credit report. If this late is reported on your mortgage your score can drop 100 points. I just discovered that one of my clients who is currently refinancing with me has a 30 day late in January of 2007. His payment was made but wasn't posted until after the grace period. Please note that today is January 21, 2007, certainly not 30 days late even if the payment hasn't been made at this time. (Of course as I have said is has been made and posted). The lender hasn't corrected the report and won't. Fortunately, we found it and are correcting it.
People assume the only way to have bad credit is too not pay your bills on time. This is not correct. People who pay their bills on time, without ever having a late payment, can have bad credit by having too much credit. If you have a number of accounts with balances that are near the high balance established on your credit report, whether it is correct or not, your score will be lowered even though you haven't been late. The answer is to spread the debt around or, even better, pay it off, but do not let it get any larger, per account, than about half of the high credit limit.
Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom.