Financial New Year’s Resolutions

A New Year is just around the corner and it’s the best time to look at what financial goals and objectives you have going into 2017.

1. Pay off or consolidate debt

Because credit cards have such high interest rates, the minimum payment is often only sufficient enough to pay off the interest on the balance owed. One way to handle this is to consolidate all your debt into a Home Equity Line of Credit – this way you can minimize the interest rate being charged and have an opportunity to refinance the line of credit into a more fixed rate in the near future.

2. Build up that emergency fund

It’s always a good idea to have emergency funding, especially when it comes to buying a house. Most lenders suggest a 20% down payment to avoid having to pay Private Mortgage Insurance. Guidelines require that borrowers need to have six months in reserves to cover PITI (principal, interest, taxes, and insurance) payments for all rental properties while obtaining a loan.

3. Improve your credit score

The best credit scores qualify you for the best interest rates – 740 is the magical number for the highest credit tier. 35% of your FICO score is based on payment history and 30% is based on your outstanding balance. The best way to improve one’s credit score therefore is by making on-time payments and paying off balances every month. The new trended credit data, which started being utilized by Fannie Mae in September 2016, classifies a “transactor” versus a “revolver”, where the latter defines a consumer who carry balances month-to-month.

4. Create a long-term plan

Having a long-term plan includes diversifying your portfolio and putting your money where it counts, whether that means investing in the stock market or investing in real estate. Rates are still relatively low and rents will always tend to stay the same regardless of the market. For this reason, many find that buying investment properties to generate cash-flow is a great decision.

Whatever it may be, having the right mindset coming into the New Year provides the necessary steps in the right direction, keeps you focused, and ensures that you will stick to the plan when the New Year comes around.

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Tawnee Dinh - Loan Officer


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