Sonoma County Real Estate Finance and Loan Guide

This is one of the most important steps for a successful Real Estate Plan!

Choosing a Loan Program - What is a FICO score?

Choose your ideal loan package from an assortment of options such as a 30 Year Fixed, 15 Year Fixed, 30 Year Fixed Jumbo, 15 Year Fixed Jumbo, 5 Year Balloon, 7 Year Balloon, 1/1 Arm, 3/1 Arm, 5/1 Arm, 1/1 Jumbo, 3/1 Jumbo Arm, 5/1 Jumbo Arm, FHA 30 Year Fixed, FHA 1 Yr ARM or a VA 30 Year Fixed.
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Choosing a Loan Program

There isn't a single or simple answer to this question. The right type of mortgage for you depends on many different factors:

1. Your current financial picture
2. How you expect your finances to change
3. How long you intend to keep your house
4. How comfortable you are with your mortgage payment changing

For example, a 15-year fixed rate mortgage can save you many thousands of dollars in interest payments over the life of the loan, but your monthly payments will be higher.

An adjustable rate mortgage may get you started with a lower monthly payment than a fixed rate mortgage, but your payments could get higher when the interest rate changes.

The best way to find the "right" answer is to discuss your finances, your plans, financial prospects and your preferences frankly with a mortgage professional. Choosing a lender

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What is a FICO score?

A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills.

Fair, Isaac began its pioneering work with credit scoring in the late 1950s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation.

A credit score attempts to condense a borrowers credit history into a single number. Fair, Isaac & Co. and the credit bureaus do not reveal how these scores are computed. The Federal Trade Commission has ruled this to be acceptable.

Credit scores are calculated by using scoring models and mathematical tables that assign points for different pieces of information which best predict future credit performance.

Developing these models involves studying how thousands, even millions, of people have used credit. Score-model developers find predictive factors in the data that have proven to indicate future credit performance.

Models can be developed from different sources of data. Credit-bureau models are developed from information in consumer credit-bureau reports.

Credit scores analyze a borrower's credit history considering numerous factors such as:

• Late payments
• The amount of time credit has been established
• The amount of credit used versus the amount of credit available
• Length of time at present residence
• Employment history
• Negative credit information such as bankruptcies, charge-offs, collections, etc.

There are really three FICO scores computed by data provided by each of the three bureaus––Experian, Trans Union and Equifax. Some lenders use one of these three scores, while other lenders may use the middle score.