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.

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.