Home Refinancing 101

While home prices have gone up, consumers are getting more bang for their buck by refinancing their homes. Within about six months of owning a home, homeowners can refinance, or finance a new loan on their properties. Moneywise reported families that refinanced in 2020 will save an average of $2,000 every year. 

Why Consider Refinancing 

Refinancing is a viable option if you need funds for home upgrades and repairs, which can increase the value of the home. Maybe you’d like to lower your mortgage payment to reach other financial goals. Lastly, homeowners can fast track paying their current home loan in full to create future cash flow. 

Think Ahead 

If you think refinancing is a good idea, in addition to the market’s low interest rates, assess your credit score and make sure any income tax payment plans are current, or atleast three consecutive payments have been made as they can affect getting the best interest rate. Use our mortgage calculators to estimate payments under new interest rates here

Would you like to switch loan programs? Check our programs here.

Where to Start

Once you know why you’d like to refinance your home loan, begin now by completing an application for pre-approval. Locate your loan agreement for all needed information, including the term of your loan and the interest rate. As a pro-tip, you may reconsider refinancing if your new interest rate isn’t atleast one point lower than your current interest rate. 

If you need more assistance or just want to talk about your refinancing options, contact us at  the Karlton Govan Lending Team at (901) 701-1339. We’re happy to walk you through the process!

Photo Credit: Pexels

According to the Federal Trade Commission, social media websites and apps have become magnets for scammers, especially during the pandemic. Losses to social media fraud reached $117 million just in the first 6 months of 2020 in comparison to a reported loss of $134 million in 2019. The Karlton Govan Lending Team is dedicated to helping you maintain your financial security. 

To avoid falling victim to social media scams, here’s what you should be aware of…

Giveaways. Scammers will often pose as people seeking to give to those in need of money when in fact, they are after your money, information or both.

Multi-level marketing (MLM) companies and pyramid schemes like “blessing circles.” Most of these schemes entice people by promising money, which is always a red flag. While most people join with little to no money, some people invest hundreds to thousands of dollars only to lose it. 

Ads. Many of the people who have fallen victim to social media fraud blamed purchasing items that they found via Facebook and Instagram ads. Tip: before buying from an ad, type the company’s name into a search engine, include keywords like “scam” and see what you come up with.

Now that you know what to look for, here’s how to protect your information…

Do not give out your banking information. Doing this is one of the easiest ways for card cracking scams on social media to succeed. 

Never transfer funds to a third-party. These third parties include, but are not limited to Zelle, Cash App or Western Union. Note: you are likely dealing with a scam whenever you’re asked to send money before receiving money.

Contact your financial institution immediately if you see suspicious activity on your account. You can protect yourself from being liable for credit or debit card charges by reporting this information sooner rather than later.

Change your passwords frequently. Social media websites and apps store and provide access to sensitive data. The Better Business Bureau recommends changing your passwords every 30, 60 or 90 days to limit the risk of fraud. 

Now that you know what to look for and how to protect your information, you are one step closer to achieving and maintaining financial security during these times to secure the best home loan for you. Take a look at our previous blog on Building Good Credit to learn more about maintaining a good credit rating.

Building good credit

The Karlton Govan Lending Team is committed to providing you with information and resources to get the best home loan for you. Did you know your credit score can play a major role in the interest rates on a loan for your next home? The higher your credit score, the lower your interest rate could be. 

Credit scores range from 350-800. If you don’t know what your score is, check in, in preparation for applying for a home loan. 


Find out what your score is. Visit any three of the credit reporting agencies: Experian, Equifax or Transunion or access your FICO Score directly, which is the score 90 percent of lenders use to determine creditworthiness. These scores can be assessed at a cost, but you can also visit sites that provide scores free of charge. 

Also note that every creditor doesn’t report credit activity to all three credit bureaus so your score could vary for each bureau. Pay all of your bills responsibility to cover all ground. 

If you determine that you need to increase your score for an optimal interest rate, consider the following steps:

Pay your bills on time. When a payment is 30 days late, there’s a chance it could be reported to credit reporting agencies as a missed payment. A late or missed payment could result in a significant drop in your score. Pay primary bills on time or atleast within a grace period, if offered by your creditor. 

Only apply for credit as needed. The number of credit inquiries you approve can affect your score. If you are shopping for items that require multiple quotes, such as auto loans or insurances, make all inquiries within two weeks to lessen the impact. 

Note how much credit you are using. How many credit accounts do you have? Take stock and only use credit when necessary to balance your debt-to-income ratio. 

Check in with your creditors. If paying key bills is a challenge, contact your creditors to set up a payment plan, change your due dates or apply for hardship services. Get more tips on how to build your credit on our blog


Crediting reporting and scoring update at the end of every month. As an example, after aggressively paying down debt, you likely won’t see the impact reflected in your score until the following month. 

You can do it yourself. Before paying a company or individual to “clean up your credit,” consider doing the work yourself. Free resources for credit repair are available online. 

Still need more information on what you can afford to pay for a home? The Karlton Govan Lending Team can help! Use our mortgage calculator to determine your monthly mortgage payment. Complete the application to pre-qualify for a loan here.

The Karlton Govan Lending Team is intentional about empowering clients by providing information that will be helpful in the homebuying and lending process. If you’ve been thinking about buying a home, now’s the time to take advantage of the market. For the second month in a row, home sales are climbing. 

Why You Should Buy Now

There is an unexpected market turnaround according to realtors and housing experts. Existing home sales are expected to decline by only 3% and new home sales are projected to rise by 3%. The average rate on the 30-year fixed mortgage at the beginning of June was just over 3%, but by month-end, it dropped to close to just under 3% at 2.95%, according to Mortgage News Daily. 

There are all-time lows around 2.9% and this trend is expected to remain at or near 3% over the next 18 months. Consumers are taking advantage of the rates, and you should, too. 

Don’t Forget About Refinancing 

You may be on the other end of the spectrum in lending, wanting to remain in your home and instead, refinance for a lower interest rate or secure cash flow.. Now’s a great time to consider refinancing with such low rates. Even if you’ve refinanced your home in the last six months, you may look at entering the process again based on your current loan’s terms. Also, home values are up, so you’ll be able to benefit even more. 

What the Trends Are Now

If you’re looking for a new home, consider what kind of home you want. The pandemic has caused prospective buyers to desire living in more suburban areas. Rather than spaces in metropolitan areas, which may have smaller living quarters. Buyers are looking for space to accommodate families staying in to enjoy both living and leisure time as well as more rooms for various uses, such as a home office, play room and lodging for extended family members and guests.

Taking the Leap

So where do you begin?  First, keep a list of what’s important to you in a home, especially if it’s a second or third home. Determine the primary reasons why you’d like to refinance your home and further goals. 

Second, but most important, get pre-approved for lending by completing our pre-approval application here to know your purchasing power and maximize your time when you officially begin the homebuying or refinancing process. 

Best wishes on your lending journey!

Top Tips for Buying a Home in 2020

If buying a house in 2020 is on your list of New Year’s resolutions, you could be in luck. This is an excellent time to enter the real estate market, with plenty of homes available and interest rates near record lows in many parts of the country. But even in a buyer’s market, it’s important to do some research and preparation before jumping into listings. That’s where the Karlton Govan Lending Team comes in! Let’s take a closer look at how you can increase your chances of being a successful homebuyer in the upcoming year.

Take a look at your income (and your spending!)

As soon as you start thinking about trying to buy a home, you need to assess your current income, assets, and expenditures across the board. This is not only an essential part of establishing a new home budget, but it can also help you obtain a favorable mortgage rate.

Start by sitting down and going through all your banking and credit card statements. If you haven’t already done so, make up a basic budgeting plan that will allow you to see where your money is going each month. Review your current rent or mortgage spending, including insurance, taxes, maintenance, and any homeowners association fees if applicable. How comfortable are you with your outgoing amounts? If you’re spending more than you’d like each month, this is the perfect time to start cutting out unnecessary expenses!

Speaking of income…start saving now for a down payment

Most experts agree that homebuyers should aim to have a 20% down payment saved up before they begin looking for a new house. There are other options, of course. However, lower down payments will typically require private mortgage insurance (PMI) or a similar regular payment. PMI provides a measure of protection for lenders in case you default on your mortgage, so the lower your down payment (and credit score), the more you’ll have to pay for PMI. Ultimately, this can end up taking a bigger percentage of your monthly housing budget.

Sometimes it helps to look at the bigger picture. For example, paying 20% down on a $300,000 home with a 30-year mortgage could save you almost $55K over the life of the loan, when compared to a 5% down payment. Paying less up front may seem like an easier solution, but it could actually cost you more in the long run. 

Give your credit score a boost

Your total income, down payment amount, and credit score are the three main factors behind what your loan will actually cost you. It can take several monthly cycles for credit report issues to clear, so it’s never too soon to start boosting your score! Start with copies of your full credit report from Equifax, Experian, and TransUnion. Check each statement for accuracy, and remedy any mistakes you find using the instructions found within the report. 

Your next step should be paying down revolving balances as much as possible. Rather than paying off a single account, focus on improving your utilization ratio. This is the percentage you owe divided by the total credit line, and paying on it will typically drive up your credit score more than eliminating one account. Try to aim for a 30% or lower utilization ratio for all of your credit cards.

Additionally, you’ll want to avoid making any major credit purchases and skip opening any new lines of credit. Finding a reputable credit monitoring service to prevent any fraud during the mortgage application process is also a smart move on your part! 

Put all the paperwork together

Depending on how organized you tend to be, it may take quite a while to collect all the paperwork necessary to buy a home. In general, mortgage applications require the following:

  • Federal and state tax returns for the last two years plus associated W-2 or 1099 forms.
  • Complete statements for all bank accounts for the last two months.
  • Two months of statements for investment accounts plus quarterly reports from your 401(k).
  • A detailed monthly debt schedule, including all loans and credit accounts, issuer, balance due and minimum monthly payment.
  • Income statement or letter of employment.
  • Additional records such as proof of rent payments, recent divorce decrees, past bankruptcy or foreclosure information, etc.

If you’re self-employed, you should also include profit-and-loss statements and balance sheets to verify your income. 

Top Tips for Buying a Home in 2020

Find a broker you can trust

With a world of information at your fingertips, it can be easy to underestimate the need for an experienced and trustworthy real estate agent who specializes in your area. However, an agent like this will actually be indispensable to you when it comes to ensuring a smooth homebuying process! 

Not only will an experienced agent save you time and money, they can also help you make sense of all the data and information you’ll be presented with. It can be difficult to truly understand what housing starts, mortgage rates, and sales trends mean from a layperson’s perspective, but a good agent can explain all of these things and more in an accessible way. 

The Karlton Govan Lending Team is based right here in Memphis, so you can always count on us for personalized service, quick decisions, and expertise from agents who know the local market. We can guide you through the ins and outs of the available inventory and market trends, and will advise and champion you through making an offer and the closing process. Our team also has a trusted network of professionals we work with regularly who will help us close your deal smoothly. 

Let the Karlton Govan Lending Team get you into your dream home in 2020 

There isn’t much time left in the year, and there’s no better time to start preparing if buying a home is on your to-do list for 2020. If you’re not sure where to start and need a little expert advice and guidance, we’re here to help. Contact us today and take the first step towards making your dream home a reality!

Giving Back to Heroes in Our Community

Giving Back to Heroes in Our Community

Honoring Heroes in Memphis and Beyond

The Karlton Govan Lending Team is thankful for every single client, and for the privilege of helping families of all kinds in Memphis and the Mid-South find their place to call home. We are especially grateful for the opportunity to help by giving back to the heroes in our community and  helping them find the perfect place to come home to after their selfless service. 

We are proud partners of Homes for Heroes, an organization that helps make buying a home easier for firefighters and EMTs, Law Enforcement, Military service members, healthcare professionals and EMS, and teachers. These members of our community are so important to our health, safety, and future, and they deserve all of our gratitude. 

About Homes For Heroes 

Homes for Heroes was first established in 2002 in the wake of 9/11, as a way to honor the first responders, healthcare professionals and military personal who were working harder than ever to keep us safe in an uncertain time. Over the next few years, the company expanded and began partnering with real estate agents and mortgage lenders like The Karlton Govan Lending Team in Memphis to serve heroes all over the country. 

So far, Home for Heroes has helped over 32,000 heroes save over $53 million on real estate transactions since 2009. Homes for Heroes, Inc. is the largest nationwide network of affiliate real estate, mortgage, and local business specialists who are committed to providing easy ways for heroes to save on a home. 

When heroes work with both an affiliated real estate agents and mortgage brokers, they save, on average, $2,400. Many save even more. Heroes save $700 for every $100,000 they spend on a home, as well as an estimated $500 in lender fees.

Homes for Heroes Foundation 

In an additional effort to serve even more community heroes, Homes for Heroes donates a portion of its profits to the Homes for Heroes Foundation. Every time a hero buys or sells a home through the Homes For Heroes program, they’re helping other heroes in need. 

The Homes for Heroes Foundation offers grants to local non-profits that serve first responders, military service members, healthcare professionals, and teachers in local communities all over the country. The Karlton Govan Lending Team is proud to be a part of the circle of giving, and the important work of strengthening local communities in Memphis by building each other up. 

Giving Back to Heroes in Our Community

Thankful to Serve the Mid-South

There is nothing that brings us more joy than empowering every member of our community through homeownership. The Karlton Govan Lending Team is committed to using our time and resources wisely to make sure that the communities we live and work in are flourishing, and the heroes among us know that we appreciate their selfless efforts. This holiday season, take a moment to thank the Heroes you encounter. 


Contact The Karlton Govan Lending Team in Memphis today to learn more about how we can give back together, or to start your own home buying journey. 

The Importance of Refinancing

Your home is one of the most important things you’ll spend money on. It’s also one of the most expensive. Your home should be a place where you can relax and enjoy the best part of your life, not something that causes you stress and anxiety. That’s why refinancing and renovation loans are such an important part of your journey as a homeowner. Keep reading to learn more about the importance of refinancing your house.

Refinancing in the Memphis Housing Market 

It’s a great time to refinance in the Memphis housing market. Even though rates will always go up and down, interest rates are currently staying consistently lower than they’ve been in over a year. If your current rates are a burden on your finances each month, you may want to investigate your refinancing options. 

Just like any big decision, you need to weigh the pros and cons of refinancing. It won’t be the right choice in every situation. The experienced lenders at The Karlton Govan Lending Team can help you find the best option for you so you can love living in your home for years to come. 

Reasons to refinance 

Here are some reasons why refinancing might be the best option for you:

To lower your monthly payment.
If your mortgage rate is much higher than the rate you would currently qualify for, either because rates have changed or your credit is improved, you may be able to significantly lower your monthly payment.

To use your home equity to better manage debt.
If your home has increased in value, you can refinance and use the increased equity to consolidate your debt with a lower interest rate and some extra time to pay it off. 

To pay off your loan faster.
If you’ve had at 30-year mortgage for several years, you may be able to refinance to a shorter mortgage with a lower interest rate. You’ll be able to pay off your loan faster and potentially save a lot of money in the long run. 

To get a low rate for the life of your loan.
If the current rates are significantly lower than the current rate of your loan may be a good enough reason to refinance your loan. 

To get rid of Private Mortgage Insurance (PMI).
If you paid less than 20% of your home’s value and have PMI on your loan, you may be able to get rid of it when you refinance. If you are in a better place financially or can present a higher percentage due to a lower balance, this would be a significant benefit. 

To avoid rate increases from an adjustable-rate mortgage.
If you got an ARM with the intent of saving some money on the front end because you don’t intend to live in the house very long, but end up staying there for the long term, it might be worth refinancing to a fixed-rate mortgage to save money with a lower long term rate. 

For many people who have lived in their house for several years, refinancing can be a great option for saving money in the long run. It can help make your house both a home and an investment. 

Refinancing Cautions 

Refinancing may not be the best choice for everyone. Sometimes it may be better to stay with the loan you have for the time being. The Karlton Govan Lending Team can help you determine if refinancing is the best option for you. 

If you’ll be moving in the next few years. 

When you refinance a loan, you have to pay fees and closing costs all over again. If you’re going to live in the house in Memphis for a long time, the monthly saving will cause you to break even within a few years, and you’ll be saving money every month from there on out. If you are only planning on living in the house for another year, you most likely won’t recoup your closing costs, meaning you won’t see any real savings from refinancing. 

More interest costs in the long run. 

If you refinance to a lower interest rate just to save on your monthly payment, you could end up paying more in interest in the long run. If you’re early in your loan, you probably won’t see the benefit you want. Make sure that when you’re considering refinancing that you calculate every angle. Consider how much of your payment will be principal and how much will be interest, and calculate if paying interest for a longer amount of time will outweigh the monthly savings. 

If you’ll lose valuable benefits from your current loan.

If there are any special benefits to your current loan, you will lose them if you refinance, so make sure the savings from refinancing are worth losing the benefits. For example, the benefit of stability from a fixed-rate loan may save you more in the long run than an ARM that has the potential to skyrocket in the future as rates fluctuate. 

Refinancing your home in memphis

Restoration and Renovation 

The Memphis housing market is perfect for homeowners and investors who want to put a little love into their home with restorations and renovations. The Karlton Govan Lending Team offers a variety of loan options that are designed specifically with home improvement projects in mind. This is a great time of year to consider home renovations that will make your home the perfect place for friends and family to gather for the holidays. 

FHA 203K Limited

There are two kinds of FHA 203K loans, which are loans designed to be used for renovations. The first of these, and the simpler one, is the FHA 203K Limited. This loan can be used for smaller projects, up to $35,000. It covers minor necessary improvements, but no luxury or structural improvements. Additionally, Repairs must start within 30 days of your loan closing, and must be finished within six months.

Eligible improvements include: 

  1. Full kitchen or bathroom remodel
  2. Garage (attached/detached/new)
  3. Structural alterations and additions
  4. Major Landscaping/decks/fencing
  5. Permanent improvements to the house
  6. Install appliances
  7. Repair swimming pool
  8. Install flooring/tile
  9. Interior and exterior painting
  10. Improvements that are a permanent part of the real estate

FHA 203K Standard 

The second type of renovation loan is the FHA 203K Standard. This loan allows you to do larger projects that may include structural improvements. Minimum loan amount of $5,000. The maximum loan amount is based on the home’s after-improved value. Since with loan is significantly larger than the limited 203K, there is more paperwork involved, and there will be more oversight from the lender. 

Eligible projects include: 

  1. Full kitchen or bathroom remodel
  2. Garage (attached/detached/new)
  3. Structural alterations and additions
  4. Major Landscaping/decks/fencing
  5. Permanent improvements to the house
  6. Install appliances
  7. Repair swimming pool
  8. Install flooring/tile
  9. Interior and exterior painting
  10. Improvements that are a permanent part of the real estate 

Fannie Mae HomeStyle Loan for Memphis Investors 

Memphis is a fantastic market for investors and The Karlton Govan Lending Team wants to help you get the largest return for your dollar. The HomeStyle Renovation allows you to finance improvements for up to 75% of the property’s as-completed value when you buy or refinance a home (That’s the appraised value of the home once the upgrades are completed). 

HomeStyle Renovation can be used for any renovation project including updates to an older home, extensive design improvements, and even to construction or renovations to additional living spaces like in-laws suites and basement apartments. You’ll benefit from upfront draws that can help get your projects started sooner. As an owner or an investor, this loan allows you to grow your equity on your purchased home quickly for a faster return on investment. 

Memphis Refinancing Experts 

Whether you’re considering refinancing to save money, shorten your loan, or to finance a renovation, The Karlton Govan Lending Team can help you navigate the many options available to you. We’ll help you find the option that fits your budget and lifestyle, to help keep your house a home for years to come. 

Contact us today to learn more out which refinancing option is right for you. 

Living in Memphis

Memphis, TN

Memphis is undeniably an exciting place. It’s vibrant, colorful, and full of culture everywhere you turn. But that doesn’t mean it’s missing any of the small-town comfort and hospitality that you’d expect from the south. Memphis is the perfect place to live for individuals, couples, and families of any age or stage of life. The Karlton Govan Lending Team can help you make the most out of this fantastic place to live. 

Memphis Culture: Diversity at its Finest 

Memphis Is packed to the brim with cultural expressions. From sports to theater to art to history, living in Memphis will broaden your horizons. 

Memphis has a rich music history that you won’t find anywhere else. As the birthplace of rock ‘n’ roll and soul, it’s no wonder that the city still boasts a thriving and diverse music scene. You can listen to the blues on Beale or catch an up and coming rock band at the Hi-Tone or Growlers. For days when you want a more refined experience, you can catch the Memphis Symphony Orchestra or the Memphis Ballet, or the host of eclectic performers that visit the Halloran Center. Another great option is a visit to the Hattiloo Theatre, the only freestanding Black repertory theatre in five surrounding states. The Hattiloo has developed a strong regional audience and is known for offering high-quality, free programming and performances staged throughout the cityThe Orpheum offer unique events from comedy shows to classic movies, to touring Broadway shows. One thing is for sure: you don’t have to miss out on any kind of cultural moment while you live in Memphis. 

And don’t forget about sports! You can cheer for local teams in almost every major sport in Memphis. The Memphis Redbirds are a triple-a baseball team affiliated with the St. Louis Cardinals, and not only are their games perfect for a night of family fun to start with, but they have fun theme nights all season long to make the experience even more special. Or, catch 901 FC fight it out in a soccer match either downtown or in Germantown. 

If basketball is more your thing, cheer on the Memphis Grizzlies at the FedEx Forum. And don’t forget to support future leaders of our community at the University of Memphis Tigers football and basketball games. 

Sun Studios

Memphis History and Museums

If you’re looking to learn more about Memphis music history, you can visit Stax Records, Sun Studios, and of course, we don’t need to remind you that you can spend a day touring Graceland, engrossed in all things Elvis. These cultural landmarks draw in crowds from all over the world. Not only do they preserve the past, but they feed into the community by hosting events and offering music lessons and other classes. 

These aren’t the only museums that both instruct and contribute to the Memphis community. The Dixon Museum of Art features fascinating exhibits and beautiful gardens, as well as a wide variety of classes for children of all ages. The Brooks Museum features exhibits from artists many different cultural and ethnic backgrounds who are often underrepresented. You and your family can fall in love with art from all over the world. 

Head Downtown to learn about the history of the region at The Cotton Museum and the Mississippi River Museum. Finally, make sure to visit the Civil Rights Museum & and Lorraine Motel to learn about the struggle for equality that still continues, and to honor those who fought for Civil Rights in the past. 

Corky's bbq

Only the Best Food

And of course, Memphis is known for its food. Memphis boasts some of the best BBQ in the world, even hosts the International BBQ Festival in May. You can find amazing BBQ on any day of the year in any part of town at places like The Cozy Corner, Central BBQ, Corky’s, and the barbeque inspired special dishes at many other restaurants around town. 

Thanks to the diverse population of Memphis, you can find any kind of food your heart desires, whether you want to experience the culture of a restaurant or try making something new at home. You can find food from Ethiopia, Japan, the Caribbean, the Mediterranean, and some of the best Mexican food you can find.  And don’t forget to check out the international market in Cordova to find the ingredients for your new favorite dish. 

It wouldn’t be the South if you couldn’t find soul food. Some places like Gus’s Fried Chicken are World Famous, but you can also ask a local to find out what they think is best. Places like Flying Fish specialize in catfish just blocks away from the Mississippi while places like The Crock Pot and Dindie’s Soul Food make you feel right at home with their classic dishes. 

Southern Hospitality in the Heart of the City 

Memphis is one of the friendliest places you can live in. Whether you’ve lived here your whole life or just a few months, you’ll be able to find a healthy community in Memphis. Once you’ve lived here a while, it’s hard to leave your house without running into a friend. Memphis is a resilient city and has relied on a strong sense of community to grow and improve into the amazing city it is today. Once you’re a part of it, we’ll put the same effort into building you up to be the best you can be.

There are so many programs and organizations working hard to make sure that no one in Memphis misses out on the opportunities that Memphis has to offer. Most major world religions have thriving communities in Memphis that work to help provide education, immigrant services, after school programs, and practical assistance to families in need, while also working with religiously unaffiliated organizations to make sure needs are being met without discrimination. Development organizations work in underserved neighborhoods to make sure that sustainable growth is taking place. Everywhere you look, people are working hard to keep Memphis moving forward. 

Affordability: Memphis Can’t be Beat 

You may be thinking that a city with this much to offer is out of your price range. That couldn’t be further from the truth! Memphis is one of the most affordable cities in the country. The median home sale price in Memphis is 148,000, and you’ll find that you can get a lot of house for that price compared to other markets. Plus, according to CNBC, Memphis is the 5th most affordable city for business professionals specifically. You won’t have to pay any state tax in Tennessee so more of your paycheck can go towards enjoying your life with your family. With low average prices for things like gas, groceries and home goods, you can get the most life out of your dollar in Memphis. 

The Karlton Govan Lending Team can help you find the perfect home Memphis to help you enjoy everything the city has to offer. Contact us today to learn how we can help you finance the home of your dreams. 


Karlton Govan is a certified mortgage loan officer NMLS#652305

Building Good Credit

Building good credit

Learn About Building Good Credit With Your Memphis Loans Expert

Good credit is essential for so many things in life. If you want to lease a car, rent an apartment, get a business loan, or buy a home, you need to have a credit score that proves that you can be trusted to pay back whatever you borrow on time. Your credit score helps to determine your interest rates, the size of your loan, and whether or not you can take out a loan at all. A bad credit score can end up costing you a lot of money. A lower credit score will always mean a higher interest rate, and in some cases, you may have to pay larger security deposits for day to day needs. If you have bad credit or even no credit at all, the idea of improving your score can be daunting. It can be hard to find the information you need, so your Shelby County lending expert, The Karlton Govan Lending Team, is here to help! 

Understanding Credit – What it all means 

Even though building good credit is essential, it can be hard to find all the facts you need. Many of us have never had someone to help us and explain how the process works. Here are some of the essentials that you need to know before you start building your credit. 

The basics

Your credit report shows your credit history. It includes any money you’ve borrowed and how well you’ve paid it back. It can also include any bills you didn’t pay on time, though it by default doesn’t include bills that you do pay on time. Your credit score is a measurement of how well you’re managing your credit accounts. Credit bureaus collect the information that factors into your FICO credit score. These scores are the easiest way for a lender or landlord to know if you meet the standards they consider necessary for the situation. You can also check your credit report and credit score yourself, and you should! It’s important to know if you’re making progress and check for any errors. 

It takes time

First and foremost, make sure your expectations are setting you up for success. You can’t fix your credit overnight. It’ll take at least a few months or as long as several years to fix your credit. If you don’t have any credit at all, it will take at least six months for a usable score to appear on your report. This can be frustrating, but if you stay on top of your debt and build a strong credit history, the results are worth it. 

Debt happens to everyone

Don’t beat yourself up about your debt. Anyone can find themselves in a tough situation, and there’s no shame in needing to put some extra work into getting your credit where you want it. It’s important to start with a plan and stick to it. Getting out of debt can improve every part of your life, from relationships to stress, to health, and of course financial security. 

Memphis Credit Building

Building your credit can be a catch-22. You need good credit to open accounts that will improve your credit, but without already having good credit, you can’t seem to get anywhere! The good news is that many banks have options to help you out. 

Credit Building First Steps

Secured credit cards allow you to start building your credit from scratch. They’re backed by a deposit that you make, so it’s like you’re borrowing your own money. It’s good for you because it affects your credit score, and good for your bank because they don’t actually have to take a risk since you’re not borrowing anything. 

You can also get a credit-building loan. For this type of loan, you don’t actually get the money until you’ve made all of the payments. It helps your credit score because the payments are reported to credit bureaus. But, doesn’t put you in any debt because it’s more like a savings account than a loan.

If possible, you can also use a co-signer for a credit card or a personal loan. If someone with good credit is willing to co-sign with you on a credit card, it will help your credit score significantly. Before you do this, make sure that the account will actually report to credit bureaus in your name and not just your co-signer’s name. Also, make sure that you and your co-signer have a clear agreement about how the account can be used, and do your part of the stick to the plan.

It’s possible to report your bills to credit bureaus so they can have a positive impact on your credit score. Services like Rental Kharma and RentTrack take an expense you’re already paying and put it on your credit report. As long are you stay up to date on your existing bills, your credit will build over time. 

The Biggest Credit Building Factors

Your credit utilization ratio represents how much of your available credit that you’re using, and you should keep your eye on it. Your utilization ratio makes up 30% of your credit score. The only factor with more impact is your payment history. Keeping your credit utilization below 15% of your limit can have a big impact on your overall score. 

As you probably know by now, your payment history has the most significant impact on your credit score. If you aren’t making payments on time, all of your other credit-building work will fall short. If you know that you have collection accounts on your credit report that are negatively affecting your score, contact the original creditor and see if they will remove the delinquent account if you pay it off. Some creditors may even remove late payments as an act of goodwill.  

building good credit

Mistakes that keep you from building good credit

  • Don’t close your credit accounts, even if you’ve paid the balance. This can negatively affect your averages. Your credit history length is 15% of your credit score, and closing your first credit card because you have a newer one with better interest won’t ultimately help you. You can stop using the older account, but keep it open. 
  • Don’t forget to check your credit report regularly. There are websites like My Fico that make this easy. 
  • Don’t have too many credit cards. One is enough to start with. It can be helpful to have multiple credit accounts, so credit building loans or secured credit cards will help you build good credit without ending up more in debt. 
  • Don’t apply for too many credit cards or credit accounts at the same time. Each time a lender checks your credit report, your score goes down buy a few points. If too many lenders are checking at the same time, your score might drop significantly. Credit inquiries and new accounts are 10% of your total score, so it’s wise to wait until your credit is strong or you’ve completed the mortgage process to open any new credit accounts. 

Trust Your Local Memphis Lending Expert

The Karlton Govan Lending Team is here to help you get the home of your dreams. Having strong credit is an essential part of the process, and can save you a significant amount of money thanks to lower interest rates. We’re happy to answer any questions you have about building your credit score. Contact us today to start your home buying journey! 


Karlton Govan is a certified mortgage loan officer NMLS#652305

Homeownership can be a great way to create stability for your future, but the process can feel intimidating if you’re a first-time buyer. After all, purchasing a home is a big deal that requires a great deal of organization, communication, and thoughtful decision making. It involves a significant sum of money and planning ahead, yet even with all the mixed emotions and stress involved, millions of Americans purchase new homes every year. So how do they manage it successfully?

One way to ensure a smoother home buying process is to enlist the services of an experienced mortgage banker, like the Karlton Govan Lending Team. While a real estate agent can assist you in your home search and negotiate with the sellers, a mortgage banker helps you find a mortgage option that works best for you and your family and facilitates the origination process. Developing a relationship with a trusted partner like the Karlton Govan Lending Team can help make this process easier and more efficient for you.

If you’re ready to give up on renting forever and start the hunt for your first home, there’s a lot to learn and this is the perfect time to get familiar with the basics of home buying. To guarantee you’re getting the right property for you and your lifestyle, take a look below to learn all you need to know to be successful as a first-time homebuyer!

Getting pre-approved

You’ll want to have a pre-approval letter in hand before you start your home search. Keep in mind that pre-qualified is not the same thing as pre-approved. Pre-qualified means a lender has pulled credit, but hasn’t verified any income, assets, or verified employment. Many agents and sellers won’t accept a pre-qualification letter. In fact, many real estate agents will only show homes to buyers with a pre-approval letter!

Getting pre-approved is free and can usually be done relatively quickly. Once your mortgage lender has the necessary documents to validate your income, assets, and credit, they will pull a copy of your credit report and FICO scores from all three major credit bureaus. That’s why it’s important to….

Maximize your credit score before you close

Your credit rating is the most important factor in the mortgage rate you’ll receive. The lower your score, the higher your rate will tend to be. There are things you can do now that will help boost your credit score in as little as 45 days. Doing so can maximize your score before you place an offer on a home.

Pay down your credit card balances – The amount of available credit you’re using on your credit cards is the credit utilization ratio, and makes up about 30% of your overall credit score. Only your payment history has a bigger impact on your score, at 35%. Paying your credit card balances below 15% of their limit can have a big impact on your overall score.

Don’t apply for new credit – Credit inquiries and new accounts each make up 10% of your score. If you’re able to, hold off on getting a new credit card or a new car until after you’ve already closed on your home!

Contact creditors about any collections or late payments – If you know you have collection accounts on your credit report, you can contact the collection agency and see if they will remove the delinquent account if you pay it off. If you request it, creditors may also remove late payments as an act of goodwill.   

It’s important that you be completely honest with our team about your credit. Knowing all the good, the bad, and the ugly up front makes it easier to address any potential issues for you as a homebuyer. The more we know, the better prepared we’ll be to get you into your own home!

Buying the right home for you

Have some idea of the area you want to live in when you begin your search, but it’s also a good idea to remain open to surrounding neighborhoods. Similarly, know which features you want in a home in order of importance, but keep in mind that you may have to compromise a little when buying your first home. Part of that comes down to….

Nice yellow home

Knowing how much house you can afford

Your debt-to-income ratio is the most important factor to be aware of when you begin looking for homes in your price range. You can figure out your DTI ratio by adding up all your monthly debt payments (credit card payments, student loans, personal loans, etc.) and your estimated mortgage payment. Divide that number by your gross monthly income before taxes. For most mortgage loans, you’ll need a debt-to-income ratio of 45% or lower, but a 36% DTI ratio is considered ideal.

As a first-time home buyer, you may be unaware of all the additional monthly costs that are associated with a mortgage loan. In addition to your mortgage payment, you will likely have property taxes, private mortgage insurance, and homeowners insurance added to your monthly payment. Keep this in mind when you begin looking around!

Gather all necessary documentation

The mortgage process can be complicated, and requires quite a lot of paperwork. Not having all your documents in order leads to document requests from your mortgage lender that can delay your closing. To avoid this, gather all of the documents needed for your mortgage and submit them early on. These generally include:

  • W2 and tax returns from the last two years
  • Paystub for the past 30 days
  • Bank statements for the previous 2 months
  • Profit and loss statements if you are self-employed
  • Divorce decree, if applicable
  • Bankruptcy paperwork, if applicable

The bottom line in home buying

If this is your first time navigating a home mortgage, it can be confusing to sort through all the financing options. A good mortgage banker can help you decide how much home you can actually afford, then steer you through all the different programs and options.  The Karlton Govan Lending Team believes in the inherent value of homeownership and understands that every financial situation is unique. Our goal is to make the home loan process as easy and seamless as possible for you as we work towards the perfect mortgage and home for you!  

If you’re ready to take the first step towards becoming a homeowner in Memphis or the Mid-South, we’d love to talk to you about your current and long-term needs. Our experienced team is here to guide you through each step of the home buying process, so get in touch today to schedule an appointment! The home of your dreams is waiting for you!


Karlton Govan is a certified mortgage loan officer NMLS#652305