Mortgages, loans and refinancing made easy

You desperately need a loan for a new house but unfortunately you don’t qualify for getting a home loan. Perhaps you have already been to two lenders and they gave you the bad news that you are hopeless. Don’t panic. Try to re-evaluate your situation and take advantage from small things other than you revenue and you might be surprised how easy you could get a home loan even with such bad credit. Check these out: Smell a Good Deal for a Real Estate – Try to discover a property that has already got some equity in it, when you purchase it. Equity represents the value of a real estate, a property after you have paid any mortgage or other charges relating to it. You might get easier a financial support for purchasing the property because some lenders consider it as if there would be some kind of down payment. Anyway, you could talk first about this possibility to your mortgage broker to see if you would qualify by doing this financial maneuver. Try to Get a Second Mortgage on the Real Estate – You could try to be more creative and ask the seller whether he would be willing to have a second mortgage on that home.
Thus you could set up an agreement with the seller through which you will have to pay monthly an approximate sum of $200, for instance, on $15,000 of the price of the real estate (plus or including the interest rate), for the second mortgage. You could state in the agreement a period of two or three years for this pledge. This would eliminate the veil of uncertainty and establish a goal that is closer than no limit at all, and no perspective. In the meantime, you could refinance or find different solutions to deal with your problem. Save Some Money to Pay in Advance – Some lenders might give you a full credit if you come with at least a small percentage of the sum. This would grant you supplementary points for getting the credit and would also lower the interest rate. If you don’t have the advance now, you could wait five or six month to save some money to be able to come with a down payment. Of course, if you can’t wait and need money urgently, you will lower the interest rate later by refinancing the credit. Don’t Give up, Go Further – don’t trust the first broker who tells you that there is no hope for you. You will finally find someone who could offer a viable solution, just keep asking and searching.Each broker has a variety of loans and relationships with more or less flexible lenders. An alternative is to apply online to mortgage services. Thus your application would be seen by more lenders and you might get more offers to analyze your solvency. Improve Your Present Credit Score – by not applying to credit cards, auto loans or other loans, if possible. Too many inquiries would also affect credit scores. Another important thing you should do to improve your credit scores is to acquit your current duties and payments on time. The conclusion is that there are always solutions to solve your problems if you insist on doing this. As far as loans for a home are concerned, you should not let a bad credit discourage you. There is always a solution for you out there.
(source:loanarticles.co.uk)

Qualifying for a Mortgage

Qualifying for a Mortgage

To some potential buyers, particularly first-time buyers, the prospect of meeting a mortgage lender may seem a little scary. Lenders ask a lot of questions because they want to help you get a mortgage. If you work with a lender before you decide on a home, you will know whether you’ll qualify for a mortgage large enough to finance the home you want.

It may seem that your lender needs to know everything about you for the application, but actually all the lender needs to know about is employment, finances and information about the home you’re buying (but you can be pre-approved before you choose a home). You will, however, need to provide quite a few details about these topics. The goal is to arrive at a monthly payment you can afford without creating financial hardships. Here's an idea of what lenders consider when they are qualifying you for a loan:

Your household income and expenses
Lenders look at your income in ways other than the total amount; how you earn it is also important. For example, income from bonuses, commissions and overtime can vary from year to year. If these sources make up a large percentage of your income, your lender will want to know how reliable they are.

Your lender will also consider the relationship between your income and expenses. Generally, your fixed housing expenses (mortgage payment, insurance and property taxes, but not repairs or maintenance) should not be more than 28 percent of your gross monthly income, although this is not an absolute rule. Your lender will also consider other long-term debts, such as car loans or college loans. It is a good idea to bring the following when you meet with your lender:

Income

* Employment, salary and bonuses, and any other source of income for the past two years (bring your most recent pay stub, previous year’s W-2 forms and tax returns if possible)
* The most recent account statement showing the amount of any dividend and interest income you received during the past two years
* Official documentation to support the amount of any other regular income you may receive (alimony, child support, etc.)

Employment history
Job stability is a factor that a mortgage lender will look for, and two years at your current job helps, but this also is not an absolute requirement. If you change jobs but stay in the same line of work, you should not have a problem — especially if the job change is an advancement or increase in income.

Credit score
Your credit score also helps to predict how likely you are to repay the mortgage debt.

Personal assets

* Current balances and recent statements for any bank accounts, including checking and savings
* Most recent account statement showing current market value of any investments you may have, such as stocks, bonds or certificates of deposit
* Documentation showing interest in retirement funds
* Face amount and cash value of life insurance policies
* Value of significant pieces of personal property, including automobiles
* Debt Information
* The balances and account numbers of your current loans and debts, including car loans, credit card balances and any other loans you may have

Underwriting
The lender does the best possible job of ensuring that a borrower qualifies for a loan. The final decision, however, rests with the lender's underwriter, who measures the total risk that the specific investor, who backs up the loan, is taking. Each investor (or investment company) has its own underwriting guidelines (often using statistical models), so while the underwriters evaluate many of the same factors as the lenders, they may look more closely at some areas than others, depending on the guidelines. For example, while the lender may have pre-approved you before you chose a home, by the time you get to underwriting, you will have chosen the property you want to buy, and the underwriter will review the property details closely.

However, most of the information used is the same as that used by the lender, but it may be evaluated differently. The underwriter will evaluate the borrower's ability to pay (income), willingness to pay (credit history), and the collateral (property). As underwriters analyze each of these risks (although this is not a complete list), here are some possible guidelines they may use:

Income

* Is the income sufficient to repay the loan? Ratio guidelines of 28 percent payment-to-income and 36 percent total debt-to-income are standard, but some programs allow for higher ratios.
* Is the income stable from month to month and year to year?
* Has the borrower been on his/her current job and in the same industry for a sufficient amount of time? A minimum of two years is the standard guideline, but exceptions can be made.
* Can the income be verified?

Credit

* Does the borrower have a good credit score (typically, 680 or higher is considered good)?
* Does the borrower have late payments, collections, or a bankruptcy? If so, is there an explanation that can be provided for the late payments/collections/bankruptcy?
* Does the borrower have excessive monthly debts to repay?
* Is the borrower maxed out on credit cards?

Collateral
Is the property worth what the borrower is paying for it? If not, the lender will not loan an amount in excess of the value. If the appraisal comes back less than the offer on the house, sometimes you can renegotiate the terms of the purchase contract with the seller and his/her real estate agent.

Some borrowers agree to purchase the home at the price they originally offer and pay the difference between the loan and the sales price. You need to have disposable cash to do this, and you should assess whether the property is likely to hold its value. You also need to consider the type of loan for which you have qualified. If you need to move suddenly and have a large loan relative to the original value, and the property has not held its value, you could face a difficult cash shortfall when you go to pay off your loan.

Is the property an acceptable type of property, and does it meet coding requirements and zoning restrictions? Is the property comparable to other properties in the area? Surveys are common and are used to get an accurate measurement of the land that goes with the property you are purchasing. The person who prepares the survey should be a licensed land surveyor. The survey shows the location of the land, dimensions of the land and any improvements.

Encroachments are improvements to property that illegally violate another's property or their right to use the property, such as building a fence that is actually on your neighbor's property instead of yours, or constructing a building that crosses from your property to another’s property without their permission. Evidence of encroachments can slow the final approval process.

The downpayment
A downpayment is a percentage of your home's value. The type of mortgage you choose determines the downpayment you will need. It can range from zero to 20 percent, or more if you wish.

A number of loans are available that do not require high downpayments, particularly for first-time home buyers. FHA loans, for example, may require less than 5 percent down, and veterans or those on active duty in the military can obtain loans with no downpayment at all. In addition to downpayment assistance, these programs may have less strict guidelines for loan approval, such as allowing a higher ratio of payment to income or debt to income. They also may accept alternative forms of credit history if you have not established credit through traditional means — credit cards and car loans. For example, a lender could look at the history of utility payments and rent payments to determine credit worthiness.

Mortgages advice

We hear every day how important it is to own real estate. What we don't hear is how to make sure we get the best rate possible and save our selves thousands and thousands of dollars over the term of our mortgage. Not everyone is blessed with the best credit and a huge down payment. So, how can you get the best deal on your mortgage or refinance?

1) Find out your credit score on all relevant credit bureaus. Don't ever let a loan officer tell you what your credit is. They are schooled in finding ways to make extra money off of you. The better educated you are, the harder it will be for the loan officer to pull a fast one on you. If you do have some issues, clean them up first. It isn't hard to get some dings off your credit and this will save you a lot.

2) Get all your documentation together. This may sound trivial, but you wouldn't believe the number of people that don't do this well, and pay steeply with higher rates and points as a result. You should, as a habit, keep a file of your tax returns, assets (bank account statements, mortgage payment receipts -if you have a current mortgage), business license (if you are self employed), etc... The better you can document your income, assets, and employment, the higher your chances are for getting lowest interest rates.

3) If you do not currently own a house, get pre-approved before making offers. Real estate agents are in the business of selling and will place an offer faster than you can blink an eye. Remember, its your earnest money you are putting down (usually $1,000) and if you don't qualify or can't close in time you can lose it. Just like with credit card offers, pre qualified means absolutely nothing. On a high demand real estate listing most sellers won't take an offer if you aren't pre approved. In many cases, they will not negotiate favourably with you without a letter of approval from your bank or lending institution. Carry your pre-approval with you when you house shop and watch what hurdles homeowners will go through for you.

4) Do not lie - be upfront about what you can and cannot document. Don't waste the loan officer’s time and yours with assets or income that you cannot document. If you lie, they will catch you when they examine your loan prior to funding and you won't be able to close. Also be wary of lenders that promise things you shouldn't be able to qualify for. Shop around - you should be getting similar numbers for your qualifications. If an offer is too low, or too good to be true, then it probably is. Don't be afraid to use internet lenders – the internet has grown rapidly and should be used to research as many lenders as possible. However, there are still quite a few mortgage scams out there so be sure to look up your mortgage company with consumer reporting agencies and relevant mortgage regulatory bodies just to make sure. It is better to be safe than sorry.

Insurance you need

There are different types of insurance that you can take out on your home and mortgage. As with trying to find your actual mortgage you should shop around for any insurance you take out – there are some good deals, and some very poor ones too that should be avoided.

You’ll probably find that your bank/mortgage provider will try to get you to take out a policy with their own company – while they may push it hard, it’s often not the best deal available so shop around on the internet and you’ll probably be able to save yourself quite a bit.

Buildings And Contents Insurance – You’ll want to insure your home and it’s contents against damage. It’s important to get it right when estimating how much cover you need – you don’t want to pay over the odds for excessive cover, and neither do you want to underinsure.

Look at your possessions – do you have any antiques that need extra protection? What type of furniture do you have? How much would all of it cost to replace? Shop around on the internet to find some great deals and you’ll save yourself thousands in the process (as opposed to signing up to whatever your mortgage provider is trying to push on you).

Mortgage Payment Protection Insurance – this type of insurance protects you against any loss of income that may affect your ability to make your mortgage payments. This can be an important cover, especially if you do not have the cashflow to make mortgage payments should you lose your job/income source.

The two important things to look out for are (1) when the insurance payment starts after your loss of income (for example, is it 30 or 60 days?) and (2) how long are you covered for (you can often get 12 to 24 months coverage).

As with most insurance types, these vary widely so make sure you shop around online and get the best deal for you.

Life Insurance – With this type of insurance, should you die your dependents will receive a sum of cash to replace a part or the full amount of your earning power. If you’re single then this is cover that you don’t really need – but if you’ve a wide and children who depend on you putting food on the table and a roof over your head, it may be cover that you should seriously consider.

Mortgage Protection Decreasing Term Insurance – This is a unique type of coverage where as the amount owed on your mortgage decreases over time, so do your insurance payments. The logic is that as your mortgage decreases, you need less to cover it should anything bad happen – so the insurance should also cost less.
Critical Illness Cover – As you might think, critical illness insurance protects you in the event that you develop a very serious injury/illness (the types of illnesses are pre-set in the policy).

Standard Illness Cover – Also known as permanent health insurance, this type of policy covers you against most types of illnesses (typically you can expect 50% of yor income to be paid out until recovery).

Bad Credit Home Equity Line of Credit

Bad credit can increase the difficulty that a homeowner encounters when seeking a home equity line of credit. Bad credit can be the reason for a poor credit score.

What is a credit score? The credit score varies between the values of 300 and 850. The credit score is the creation of the Fair Isaac Corporation. Lenders who arrange for a home equity line of credit use the credit score in order to set the interest rate that will be charged the homeowner.

Homeowners with a low credit score will need to pay higher interest payments. A score above 700 is assurance of good interest rates. The credit score also serves as an indicator of whether or not a lender should accept a homeowner’s application for credit. Decisions on credit limits for the homeowner are likewise based on the homeowner’s credit score.

The credit score is a function of the homeowner’s past line of credit. In the U.S., three different agencies keep a record of each consumer’s line of credit. Those agencies are Experian, TransUnion and Equifax. If a homeowner with a low credit score wants to raise that score, then the homeowner must contact each of those three agencies.

The effort to overcome a record of bad credit and to raise a credit score requires the contesting of false claims that money is owed. If the homeowner can prove that the claim for money is spurious then the homeowner has an opportunity to raise his credit score. This action should be taken if the homeowner who plans to seek a home equity line of credit has a score less than 640. Such a score would be a sign of bad credit.

The contesting of a credit score is not like a shot in the dark. A survey of credit reports in the U.S. showed that 80% of such reports contained mistakes. Thus, a homeowner could have good reason to question the credit score that is being used to determine the interest rate on a home equity line of credit.

The credit score for a couple, a pair that are joint homeowners, is based on three credit scores from the person with the most sizable income. This is the score that the homeowner needs to make correct. Such correction may require a written statement to each of the above-mentioned agencies. Those agencies will then contact the homeowner and indicate if more information is necessary. If the homeowner is lucky, then the credit score will be increased and the interest rate for the desired home equity line of credit will be lowered.

Once the homeowner has a good credit score then he will want to avoid slipping back into that region of bad credit. This means that the homeowners must avoid the sort of spending that carries them to the borders of their credit limits.

Re-Financing with an Interest Only Mortgage

Re-Financing with an Interest Only Mortgage

Interest only mortgages are a relatively new phenomenon in the re-financing industry as well as the home buying industry. While the appeal of an interest only mortgage is typically a greater monthly cash flow, this increased cash flow can come with a hefty price tag. In exchange for more cash flow each month, the homeowner may be sacrificing the ability to obtain a fixed rate mortgage as well as the ability to build equity. This article will further examine these features to provide the reader with more information on the subject of interest only mortgages.

Greater Monthly Cash Flow

The one main advantage for many homeowners in an interest only mortgage is the ability to increase monthly cash flow. Homeowners who re-finance by utilizing an interest only mortgage will likely have more money available each month because they will only be paying interest on their mortgage initially. The reduction of the principal payment can make it easier for the homeowner to either afford a larger house or have the ability to live more extravagantly on their budget. However, there is often a significant price to pay for these types of re-financing options.

While interest only loans may not be ideal, they can be beneficial in the situation where the homeowner is having a great deal fulfilling his monthly obligations. In this case, the homeowner may be willing to sacrifice an overall financial loss for the ability to continue to pay monthly bills in a timely fashion.

Unknown Risks of an ARM

Interest only re-finance loans are typically offered with an adjustable rate mortgage (ARM) this means the interest rate is not fixed and may fluctuate with the rise and fall of the prime index. This risk can be quite costly for the homeowner if the interest rate rises significantly. There is usually a cap placed on the amount, in terms of percentage, the interest rate can rise in a certain period but this can still be a very costly mistake for the homeowners.

An ARM re-finance option with an interest only component may be worthwhile in some situations. For example if the homeowner has a hybrid mortgage which features a fixed interest rate during the interest only portion and an ARM during the principal and interest portion of the loan they might benefit from this situation if they do not plan to stay in the home for longer than the interest only period. This period may vary depending on the lender and the circumstances. Homeowners who plan to sell the house before the interest only period ends and the ARM period begins enjoy the benefits of lower monthly payments and the security of fixed interest rates before they ever have to worry about repaying the principal or dealing with the varying interest rates.

No Equity in the Home

Another disadvantage to the interest only re-finance loans is they do not allow the homeowner to build equity in the home during the initial period where only the interest on the loan is repaid. This can be a problem for homeowners who are looking to profit through the sale of their home. These homeowners may find the participation in an interest only re-finance has had a damaging effect on the profit they are able to generate from the resale of their home.

Checking Mortgage Rates Online

Homeowners who are planning to re-finance their home may find the Internet to be a very worthwhile resource. The Internet is useful because it can give the homeowner a wealth of information as well as the ability to compare different rates from different lenders at their convenience. While these options have made re-financing a more convenient process there is more potential for danger. However, homeowners who exercise a small amount of common sense in using the Internet for re-financing often find they are not at any additional risk.

Comparison Shop at Your Convenience

One of the most popular advantages to researching re-financing online is the ability to comparison shop at the homeowner’s convenience. This is important because many homeowners work long hours and often find they are not able to meet with lenders during regular business hours because of job restraints. The Internet, however, is open 24 hours a day and allows homeowners to research their options, make important calculations or receive online quotes at any time of the day through the use of automated systems.

Homeowners can also take their time comparing the quotes they receive from these lenders online instead of feeling pressured to provide an immediate response. While homeowners may have some additional time available to them, these same homeowners should realize they do need to act relatively quickly to lock in estimates they receive as interest rates are often time sensitive in nature and cannot be guaranteed for long periods of time.

Use Only Reliable Resources

Homeowners who are using the Internet to research re-financing options and obtain quotes should carefully consider their sources when making important decisions regarding the subject of re-financing. Homeowners who stick with well known lenders and established websites will not likely encounter problems but those who select a new lender may be surprised by the results of the re-financing attempt.

Homeowners who are unsure about the reliability of a particular resource or lender should do additional research on the company. One of the easiest ways to do this is to consult the Better Business Bureau (BBB). The BBB may be able to provide the homeowner with valuable information regarding the number of previous complaints against the company. A company who has a large number of unresolved complaints should be considered an unreliable company. However, homeowners should not assume companies without a significant number of complaints are reputable unless the company has been in existence for a number of years and is a member of the BBB.

Homeowners should also take care not to be fooled by fancy web design. A website which looks very professional is not necessarily a website which is accurate and informative. Many skilled website designers can create websites which are both attractive and professional looking. These website designers can also optimize a website for particular mortgage related keywords so users find the page easily when searching for these terms but this does not necessarily make the website designer knowledgeable about the subject to re-financing.

Confirm Loan Terms in Person before Committing

While shopping for re-financing options online is certainly easy and convenient, homeowners should consider completing the application process either in person or over the phone instead of relying on an automated system. While the Internet is good for research purposes, homeowners can take advantage of face to face meetings or telephone conferences to ask all of their relevant questions. Asking all of these questions will help the homeowner to ensure he fully understand the loan terms as well as all of his available options.

Completing the re-financing process in person or over the phone can also prevent the homeowner from being surprised by any elements of the mortgage re-finance. This may include additional fees which are tacked on during the processing of the application, rates which are only available in certain situations or other elements of the re-financing agreement which could significantly impact the homeowner’s decision making process.

Mortgages advice

Mortgages for people with bad credit

The most important factor that determines whether a person is can procure a loan for himself or not is the fact, whether is past credit history is stable enough or not. All factors depend on his past record of handling credits. A bad credit history implies that his appeal for a loan would be rejected and won’t be met in most of the places. And the worst part is that, if the concerned individual in his past has ever been declared as bankrupt or had a foreclosure, then for sure the borrower would face difficulties when he tries to get a financing for a home mortgage purchase, home equity or second mortgage loan. But the gab that home loans are not available for people with bad credit history is just a baseless myth. Since these loans are available to people with bad credit history too. The way however to find such a kind of loan, however is to be to be persistent in looking out for such kind of loans, because there are home mortgage loans for people with bad credit.

The basic problems involving, the process of procuring loan arises from the activities of sub-prime lenders. These are those lenders who actually work really hard for fetching loans for the people with bad credit background and low credit score and then the charge absolutely unreasonable price for the job. Borrowers should be careful of borrowing money from sub-prime lenders, as they can charge high interest rates which, comparatively are too high than the market rate. Not only this, but these lenders also charge unreasonable pre-payment penalties. Online articles are posted in websites to inform the borrowers about their existence and caution them.
However, it’s not absolutely impossible to find lenders who give out loans at reasonable rates and agreeable charges, to people who have a bad credit history. All a borrower needs to do is look around and talk to different mortgage brokers, which would prove to be helpful to find a lender, that can get them an approved loan with a reasonable interest rate and fair terms of repayment.

Things that the borrower, should make sure about, are that he makes use of the lowest interest rate and terms possible. Specially a borrower with a bad credit history and bad credit score should make sure that he sends application for loans to a number of different lenders, since it would be sensible for him to make comparison between different mortgage loan quotes, so that he makes sure that he chooses the best one.