Category Archives: Financial Tips

When Homeownership Makes Cents

It’s been a long, long debate: Should you rent or buy your home?

To help make this decision, consider these five questions.

Is it expensive for you to rent in your community?
If you’ve noticed that rents are rising lately, you aren’t alone. The Associated Press reported in the spring of 2014 that nationwide apartment rents averaged 6% annual increases from 2000 to 2012. And in some markets, such as downtown areas of major cities, rents have soared even higher. If the rents in your preferred neighborhood keep rising, it might be time for you to buy a home, take out a new mortgage loan, and lock in monthly payments that won’t rise each year.

Do you want to establish new roots?
Have you found the perfect neighborhood for you and your family? Do you plan to live there for seven years or more? If so, buying a home may make sense for you. Renting is a good choice if you expect to have to move soon. But what if you don’t have to move in the near future? Buying a house gives you the chance to become part of a community — and build equity from loan payoff and rising home values.

Are you ready to start or grow your family?
If you’re ready to add children to your family or take back an elder relative, a larger home makes perfect sense. You might also want to get a large backyard. You might find that living in an apartment may feel a little too cramped for your growing family and their needs.

Are you a creative person?
This might seem like an odd question to ask. But think about it, when you’re renting an apartment, you’re often restricted to decorate the way that you might like. But if you own your home, you can paint your walls almost any color of the rainbow. You could even turn your kid’s bedroom into a kind of jungle fort. And if you wanted to, you could even paint your fireplace mantel pink.

Are you in need of another income stream?
If you buy the right kind of home, with a separate live-in unit, you can rent out some additional space to generate extra income for yourself. This extra rental income might come in handy if you’re looking to save for a long-term expense, or even to give your own retirement fund a boost.

So if you’ve answered “yes” to some or even all of these questions, it’s probably time to buy a home. The Hagre Group has the knowledge, experience and dedication to help you find the home of your dreams. Contact us today to learn more about the home buying process.

Closing That Credit Card Account Might Hurt Your Credit Score

Closing a credit card account, even one that you never use, might not boost your three-digit credit score. In fact, closing a credit account may even have a negative impact on your credit score.

That’s because of something called the credit utilization ratio. This ratio simply compares the amount of credit that you’re currently using with the amount of credit that you have available to you.

For an example of how this credit utilization ratio works, let’s say that you have three different credit card accounts with a combined total credit limit of $10,000. Now, let’s suppose that at the moment, you have $3,000 of credit-card debt, spread across those three credit card accounts that you have. With these numbers, you would have a credit utilization ratio of 30% (the $3,000 of debt divided by the $10,000 of available credit).

Your credit score will be higher the lower your credit utilization ratio is. Now, let’s imagine that you still have three credit cards, but that $3,000 balance we talked about is spread across only two of the credit cards which you have. Also, the credit limit on your remaining card (which currently has a zero balance) is $3,000. If you were to close out this remaining card, the total available credit that you would have available to you would decrease from $10,000 to $7,000. However, your credit utilization ratio will have risen dramatically, up from 30% to 43%.

Having a higher credit utilization ratio could cause your overall credit score to fall. An estimated 30% of your FICO credit score is made up of the amount of money you owe and how it compares to the total amount of credit that is available to you.

Unpaid Medical Bills Will No Longer Be a Big Drag on Your Credit Score

Struggling to keep up with your medical bills? A change in the way the most important of your credit scores is calculated could make missed payments for doctor visits and hospital stays less damaging to your three-digit FICO credit score.

FICO announced last August that it would place less emphasis on missed medical bills when determining the credit scores of borrowers. According to FICO, those borrowers whose only financial missteps are unpaid medical bills could see their FICO credit scores jump by as much as 25 points.

This is good news for consumers who always make their auto-loan credit-card and mortgage loan payments on time but have been struggling with higher healthcare costs. FICO’s decision to make unpaid medical bills less of a drag on consumers’ credit scores could also mean that a greater number of these consumers will now be able to qualify for mortgage loans. Of course, this doesn’t mean that you shouldn’t pay your hospital and doctor bills on time. After all, if you do, your credit score will be even higher than it already is. Remember, the surest way to a strong credit score is to pay all of your bills on time. And if you want to provide another boost to your score, pay down as much credit card debt as possible.

These two steps will provide you with the surest path to qualifying for a mortgage loan.