Financial Resolve Turns in New Buyers
Every January most people think of a New Year's resolution. Spring approaches and body fat review season begins. According to the National Foundation for Credit Counseling, Silver Spring, Md., however, June, otherwise known as national homeownership month, is time for a midyear checkup and the improvement of customers' financial wellbeing.
One can argue that a financially healthy person and family is less stressed and potentially more successful in their efforts to lose pounds, quit smoking, or correct other wrongs of yesterday.
As we cross into the second half of 2008, NFCC suggests we review our financial resolutions and goals, such as: "Have you paid for your holiday 2007 purchases? If not, and you're still charging, your debt is growing faster than the national debt." There is a simple reason fro everyone to hurry up and pay off credit card debt: earning interest instead of paying interest, NFCC said, and it also lowers one's credit utilization ratio, which improves the FICO score.
Borrower education can happen through different venues, including lenders and nonprofits, but another simple way borrowers should know about is a home-based financial center. Whether it is a shoebox, or a full-blown home office, NFCC said, the point is to create an easily accessible area where all financial records are filed. After all on average late fees are about $40 plus the negative effect on the credit score. Data show that even though every 12 months borrowers can obtain free credit reports from each of the major bureaus, the 2008 NFCC-MSN Money Financial Literacy Survey found that only a minority of Americans had ordered their credit report. One-third or roughly 72 million adults, "readily admit they do not know their all-important credit score."
Both borrowers and lenders should be interested in regular credit report data that also help identity theft and fraud. It is a known fact that many borrowers are not aware a person's credit score determines what the interest will be on loans and credit cards, or whether a mortgage application is approved and how affordable it will be over the life of a loan.
According to NFCC financial experts agree one should have between three and six months income socked away in a liquid, interest-bearing account and have a rainy day fund, which can start small with channeling 10% of each paycheck into savings "and then forgetting it's there."
Establishing an emergency savings account is another important step. Americans are lousy savers, the survey showed as roughly 76 million adults say they do not have any savings outside of that designated for retirement. Contributing the maximum into the retirement plan at work is important but not that popular as over one-quarter of Americans are not saving anything toward retirement, according to the NFCC-MSN Money survey. Starting small is better than not starting at all, particularly if the company will match your contribution.
"The year is only half over. That means that you have six months left to get back on track. There is nothing to be gained by delaying," said Gail Cunningham, spokesperson for the NFCC. Professional help is available through trained and certified consumer credit counselors from NFCC members. A good credit score, savings and planning eventually bring people to the mortgage loan-closing table. In his statement following the House's resolution to recognize June as "National Homeownership Month," Mortgage Bankers Association president and CEO Jonathan Kempner applauded Congress for reaffirming homeownership's role in long-term wealth building. The industry is working to preserve homeownership opportunities, he said, aiding troubled borrowers and providing financial literacy resources such as MBA's HomeLoanLearningCenter.com to help future buyers in need of information on credit, loan types and understanding the entire process before buying a home. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/