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Mortgages Are Not As Complicated As You Think

Mortgage Maven — Mon, 27 Dec 2010 16:29:11 +0000

Are you looking to find out information on various kinds of mortgages? If so then this article will hopefully get you started out on the right path, so that you can get the right type of mortgage to use. There are many kinds of mortgage products. This is because there are many kind of people in many kinds of financial situation.

Most peoples situations are completely unique and unlike anybody else’s. Therefore it is important that mortgages can be as flexible as people need them to be. While some people may have really excellent credit scores and can always get access to the very best loans ever, there will be some people who have poor credit scores who can only get access to really bad mortgage products and loans.

Because of these varying situations, there have been many different kinds of mortgage company that have set up in business, to supply information and quality advice on different kinds of mortgages. At the end of the day people want a mortgage which is as low-cost as possible with as little hassle as possible.

If a customer was to get into any sort of trouble, then they need to be able to rely on their mortgage company to be quite flexible and help them out from time to time. Because a customer is going to be with the mortgage company for many years, they may need the mortgage company to be able to offer them payment breaks and special reductions for periods of time. When looking for a mortgage please choose the companies who have high levels of feedback and good quality ratings.

After all, a mortgage needs to be as individual and unique as you are. Without this flexibility, there will be many people who simply would not dare take the risk to buy a mortgage.

The different types of mortgages

Mortgage Maven — Thu, 10 Jun 2010 06:37:04 +0000

If you are buying your first home you might be a little confused about all the different types of mortgages that are now available. Many people are now utilizing the services of a mortgage broker because buying a house is a big commitment and it is very important to make sure you have the right loan. The following provides a basic understanding of the differences so you can choose the best mortgage for your situation.

Standard Loan
In 90% of cases a standard mortgage is the best option for buying a home. This type of loan is offered by almost every financial institution and, in general, has the lowest interest rates in the industry. You must be able to provide documentation, such as proof or income, other debts or assets, and savings history that shows that you are eligible for this type of loan.

No Income Verification
A no income verification mortgage is the type of mortgage that you apply for if you cannot, or do not want to, provide information about your income to the lender. It is designed for people who are financially able to make the repayments, but earn in a non traditional way, such as someone who lives off investments.

No Doc (Low Doc)
Similar to the previous mortgage a no doc loan basically means that the borrower doesn’t need to provide the paperwork that the lender would usually require. However, you may still need to prove that you will be able to make the repayments and undergo a credit history check.

Investment Loan
These type of loans, also called a non owner occupied mortgage loans, are designed for real estate investment and, in some cases, other forms of investing such as the stock market. However, most people choose to use a line of credit loan to finance their other investments.

Having a basic understanding of the different types of mortgages can help prepare you for your final decision. If you want a more in depth explanation a mortgage broker or financial advisor would be a good place to start.

Getting a Bad Credit Mobile Home Loan

Mortgage Maven — Fri, 23 Apr 2010 13:53:20 +0000

Are you needing to take out a bad credit mobile home loan? If so, then in this post you will find a few key tips which can help you to secure the loan and get a better rate on the loan.

First of all, there are two things you must do in order to qualify for a traditional home loan on your mobile home. First, you need to make the home a more permanent location. The litmus test that banks use for this classification is if you have taken off the wheels and set the mobile home on a sturdy foundation instead. By doing this you show the bank that you are there to stay. The second thing you must do is to own the land where the home sits, or at least include the land in the loan. Again, this shows a sense of permanency and allows you to qualify for a normal loan. If you don’t do these two things then you will need to find a different type of loan to qualify for, and with bad credit you might have a harder time.

The second thing you need to do is to try to improve your credit, and you can do this in two ways (both of which are recommended). First, you need to find out what is hurting you on your credit report and work to fix it. Sometimes there are small dings that really shouldn’t be there and just need to be contested to clear them off your record. Second, you can also find someone who is willing to offer to co sign on your loan with you. If you can find someone who has good credit, a relationship with the bank, and who has decent income, then this can go a long way in helping to transform bad credit mobile home loans into good credit loans – making it so you not only qualify for the loan but so you also get a great rate on the loan.

Five Basic Areas to Know for First Time Home Buyers

admin — Thu, 08 Oct 2009 19:21:12 +0000

If you are buying a home for the first time. It is imperative to know several important aspects of the process. The glossary of loan terms is one thing that you should familiarize yourself with. However here are the 5 areas that can be critical. Being aware of these will help you avoid costly mistakes.

Today home loan programs are more responsible with FHA being the most popular with a minimal 3.5% down. A family member can gift you the required down payment. It is preferred to have between 10-20% down. If you can muster 20% down you may avoid mortgage insurance.

Real Estate agents will want to know that your are pre-qualified. This entails a look at your income, assets and credit history. It is a prime indicator of your sales price limit, ability to repay the loan and your probability of paying back the loan. In this step, your monthly payment is determined based on the current interest rates. Your credit score will also determine the rate. A score of 700 or higher earns you the best rates. Financial experts recommend around 25% of your income as a mortgage payment. A debt ratio of 38% or higher becomes a concern with regards to affordability. Your assets will be verified to confirm down payment, closing costs are in the bank and for how long. You may need 2-6 months of payment reserves to allow a cushion depending on loan product.

You will want to know your costs of doing your home loan. The Good Faith Estimate is the disclosure for this. It will detail all the loan particulars such as interest rate, monthly payment etc. It mostly gives you the detail of fees from the lender, title and escrow, and your taxes and insurance prepaid amounts. Keep in mind initially it is an estimate just as the title implies. You should get this disclosure before you leave a lender or shortly after a phone application. It is wise to keep this form to keep everyone generally accountable. Expect reasonable differences however as factors change along the way.

Your trusted local real estate agent and home loan professional will help guide navigate you through the process. You are now pre-qualified for a purchase price and can start looking for a home with features and location in mind. In the process of negotiation, it is normal to ask the seller to pay 3-6% of the closing costs. Check with your loan professional to be sure your loan product allows this. After making an offer, you will likely get accepted! This is the good news you want to get started. Now the ordering of the home inspection, appraisal, formal loan approval and satisfying underwriter conditions begin. Expect to be asked for more information, possible delays, and roadblocks as part of the process to completing your purchase.

The Closing is what is considered drawing loan documents for signing the deed of trust, the note, and all disclosures in title. In some cases a mobile notary may be used. Finally your loan should be ready to fund and record. Now the house is yours!

To sum it up, good communication and experienced professionals will help make the overall transaction smoother. Choose carefully in the beginning who you want to work with. Cathy Acosta of Mission Hills Mortgage Bankers says, I love first time home buyers as I am a teacher at heart and can empathize with their inexperience. It is important to not assume buyers know or understand the loan process fully. Seek people you trust and are recommended. Learn as much as you can and most importantly take the initiative.

Planning For Your Mortgage

admin — Mon, 03 Aug 2009 16:19:10 +0000

With the large variety of mortgages available it’s easy to get confused about which one you need. A simple way to avoid this confusion is to visit one of the popular mortgage sites to get the most up to date information available. If you want to get the best deal on your mortgage it’s important that you take the time to understand mortgages and the rules that will help you benefit from them.

In addition to the many types of mortgages available there are many reasons why people are trying to get mortgages. Getting a mortgage is a huge commitment and one that should not be entered into lightly. Take the time to evaluate your current financial situation and projected future situation before entering into a mortgage agreement. Understanding your personal finances well will help you avoid the possibility of being trapped in a mortgage you can’t afford for the next 30 years. Consider if you might need professional guidance.

While I’m sure you are very intelligent the fact is you’re not a mortgage expert. Consulting with a mortgage broker can help you avoid common pitfalls in mortgage financing easily. A good mortgage professional has encountered many different scenarios and will often be able to help you avoid problems with your mortgage now and in the future.

This type of professional will be able to help you not just with mortgage laws and requirements, but also with your personal budget as well as advising you on the direction of mortgage rates. If rates are heading down it may be in your best interests to wait several months to a year before getting your mortgage. A lower rate can lower your monthly payment or allow you to buy a larger and more luxurious property.

By planning this way you can avoid the type of financial disaster currently affecting so many who didn’t properly plan before entering into a mortgage agreement. Home mortgages are a good way to establish your credit, build wealth and upgrade your standard of living, but only if you understand what you’re getting into. Don’t make the mistake of agreeing to a mortgage before doing your due diligence.

Poor Credit Home Loans

admin — Thu, 30 Jul 2009 13:37:44 +0000

Lenders assign you a credit score any time you apply for credit. This is there way of them determining whether you are a likely candidate to give credit to, or not.

The credit score is a 3 digit number, typically in the range of 300 to 850. At the low end 300 means you have very bad credit and would be unlikely to receive a loan, and on the other end of the scale a credit score of 850 would have the lender salivating at the opportunity to loan you a heap of money.

Although there is no hard and fast rule about the way the credit score is calculated (and indeed many institutions have their own formula’s which are adapted from the standard way of calculating) here is a general guide to how it is determined (these figures are approximate).

35% of your score will be based on how on time your payments are (or how late they are/have been).

30% of your score will be based on the total amount of debt you currently have versus how much available credit you have. You would add up the total balances of all your debt to get the first figure, and then add up the total credit limits of your cards, and other loans to get the second figure.

15% of your score will be based on the amount of credit history on file.

10% of your score will be based on the type of credit (this area is a little vague and can be adapted by each lender).

10% of your score will be based on the amount of credit recently obtained and/or the number of recent applications for credit.

Again, these figures are only a rough guide and there would be numerous overrides built into the systems by each lender. For example if you had a number of very overdue payments this could drop your score well over 35%. Also things like bankruptcy, foreclosures, and judgments would dramatically decrease your score.

There would normally be a process where the lender would enter your details into their computer system and if the score came out lower than the minimal they have decided on for a particular loan, your application would get rejected.

When considering poor credit home loans ; we suggest you do some diligent research first. So what can you do to improve a bad credit rating?

1. If not already doing so, ensure you are making all payments on time, or even a little early. Paying a little extra can also help in some cases.

2. If you have any judgments on your credit report for unpaid accounts, get them sorted out. Either pay the account, which will in some cases get the item removed from your credit report (if it is not removed, at least the lender will see that it has been paid), or double check it is correct (sometimes incorrect information gets put onto your report). Sometimes using a credit repair company it is possible to get your credit repaired. But be sure to do your research to find reputable companies.

3. Limit the amount of applications you are making for credit.

4. Consolidate your debts. For example if you have three items of credit, get rid of two of them, and just use one.

Or get the credit limits reduced on your credit cards. Sometimes a lender will look at the total amount of credit you have available and decide not to loan you money because that number is too high! Reducing your credit limits on each card, and / or reducing the number of cards would assist here. Unfortunately this can sometimes work against you as well, if the lender believes you have done this purely to obtain the loan.

5. Savings – Sometimes, showing a decent amount of money you have saved over a period of time will give the lender confidence in your ability to manage money.

6. If you have overdue accounts now, get them current now, and contact your creditors immediately to discuss – Don’t wait till the situation gets worse.

The problem of a bad credit rating does not go away quickly of it’s own account (generally an item on your credit report can last up to seven years), so prevention i.e. without a doubt paying your accounts on time is the best cure.

If you are stuck with a bad credit rating now and need a loan, there are bad credit lenders who specialize in lending funds to people in your situation. You will usually have to pay a higher interest rate but this can generally be a good way to start getting your credit score improved.

What Is A Loan Modification Program

admin — Sat, 18 Jul 2009 03:04:03 +0000

Modifications have been in existence as long as the mortgage lending business has. However, the word was relatively uncommon. Thanks to the decline in the U.S. economy, the phrase “loan modification” has now become a household term. Today, lenders are examining their portfolios in an effort to help their struggling homeowners.

By definition, a loan modification is simply a change or adjustment to the original mortgage agreement that was secured during the purchase or refinance of an individual’s property. The last time you closed on your home you were required to sign a document called the Note. The promissory Note details the terms of how the loan is to be paid back.

It shows information which includes, monthly payments, term and final payment date. When this note is changed the result is called a modification. Common changes made to Note might include lowering the interest rate, a principle reduction of the balance or a change in the terms of the loan. In many cases it is a combination of each.

Primarily, loan modifications happen as a result of negotiations with your lender. Many people believe that professional modification companies are responsible for the end results, this is not accurate. Professional services mealy act on your behalf. They typically will charge $1,500-$3,000 for their services, with no guarantee of a specific outcome. In reality, only your lender is authorized to change or modify your note. Any result or outcome from a loan modification will ultimately come from your lender. When completed, the results are usually dramatic. A reduction in monthly payments of 35% or greater is very possible.

Well, if this explains how a loan modification works, then why would a bank even do one? The benefits to the consumer are obvious. You might be surprised to learn that the bank wins here too. A restructured loan means a better performing asset and less risk for delinquency or foreclosure. Think of it another way. If you were a landlord and had a tenant who was struggling to make the rent payments, reducing the rent might be a way to keep a good tenant and avoid the hassle of an eviction process and finding a new renter. Usually, the Banks belief will be ‘a partial payment is better than no payment at all’. It is for this reason that loan modifications can actually have successful results.

Right now, mortgages rates are less than 5%. If you have a rate that exceeds this amount, you could stand to benefit tremendously by renegotiating your loan. It can be an easy decision for your bank as well because they are not taking any major concessions either. They are only reducing your mortgage rate to current levels, therefore it’s not a loss for them. As a result, your mortgage payments are less, the Bank’s default risk declines and it’s a win win situation for everybody.

Qualifying for a modification is completely different than qualifying for a refinance. Don’t be reluctant to contact your lender because of your credit, job history or lack of home equity as these things are really not considered negative factors.

Once you have decided to move forward, the only other consideration is whether to hire a professional or do it yourself. As stated earlier, because your bank will make the final decision, you can do it on your own. With just a few hours of invested time, the same results as professional services can be attained.

An important note here, before you call your lender you need to have a general understanding about the loan modification process and how the bank will qualify you. Understanding this is the key to increasing your chances of getting approved.

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J.Pisicchio is a 20 year veteran mortgage professional. He has worked in all aspects of the lending business gaining experience from working at large corporations such at Chase. Formally trained as credit analyst, he has spent his career educating borrowers so that they can make the best possible financial decisions. For more information on loan modification visit http://www.mortgageloanmodificationsecrets.com

A Primer for First Time Home Loans

admin — Tue, 23 Sep 2008 17:54:33 +0000

What are Home Loans?

Home loans are used to finance a home purchase and are also known as mortgages. There are many varieties and they can be tailored to suit the needs of the home buyer.

What is a mortgage?

A mortgage is quite simply a loan taken to buy a home. There are many types of mortgages and these loans are also called secured loans because the home itself serves as collateral and “secures” the loan. Most mortgages require you to put some amount of money on the home as a down payment and this amount can vary. Typical down payment amounts are 10-20% of the home value, but mortgages are available for $0 down, especially for first time home buyers.

Where to find Home Loans?

There are many lenders that offer home loans, from banks to credit unions and you can even get mortgages online now. If you’re looking for first time home loans you may want to start with the bank where you have your checking and/or savings accounts as they may offer discounts for established customers. Online mortgage brokers are also a good place to look as it is easy to find them and also easy to get a quote.

Determining eligibility for a Home Loan?

There are several factors that a lender will use to determine your eligibility for a first time home loan, however the most important of these is your credit score. Your credit score is the number assigned to your credit rating by the three big credit reporting agencies, Trans Union, Experian and Equifax, and the higher this number is the better. Your credit score is influenced by the number of loans you have and your repayment history among other things.

How are home loans paid?

A home loan is usually a very long term commitment, the typical mortgage is taken out for 30 years. This is because the loan amounts are so large that shorter terms would make the monthly payments unbearable for most working people. Home loans are usually paid on a monthly schedule although it is possible to get mortgages that are paid every two weeks. The benefit here is that the borrower ends up paying less interest with this type of repayment schedule and in many cases can pay the home loan off in as little as 10 years.

When should I get a Home Loan?

Basically, you’ll need a first time home loan whenever you decide to purchase a home. The best time to do this is really up to you. Can you afford the down payment and monthly obligation? Are you planning on staying in the same area for longer than the next 5 years? These are both important questions that can affect whether or not the time is right for you to get a first time home loan.

You also want to consider the current interest rates being charged. If rates are high it may make more sense for you to wait. Also think about your credit score. If your score is low it can also make sense to wait. The benefit of waiting is you can save more money for the down payment and can also get a decreased interest rate, saving you money in the long run. First time home loans are typically easy to get, even for those with poor credit and the biggest benefit is that you become a home owner.

The Case for Rising Mortage Rates

admin — Tue, 16 Sep 2008 17:38:16 +0000

Mortage rates is a common misspelling for Mortgage rates when you’re typing too quickly, I know because I’ve done it many times :>)

Now, let’s talk about mortgage rate predictions. Currently mortgage rates are at historically low levels even though they’ve been creeping upwards for the past two years. Predictions were that mortgage rates would begin to increase sharply after the November elections, but that may all be changing given the recent activity in the mortgage and banking world. We’ve seen the bailout of Fannie Mae and Freddie Mac as well as the Lehman Brothers failure and the possibility that the Federal Reserve will now be cutting interest rates again. We can hope that these things will keep mortgage rates low for the for-seeable future, but here are the arguments for rising mortgage rates.

1. Rising Inflation

We’ve all seen the price of gas, food and energy rising over the past 1-2 years and unless that slows down we’re looking at some fairly steep inflationary pressures. As these prices rise so does the rate of inflation and interest rates are tied into the cost of borrowing from credit cards to home loans and every other type of lending. If inflation continues to rise then so will interest rates and mortgage rates.

2. Falling US Dollar

The U.S. dollar has been weak for several years now and the sub prime lending crisis helped keep it down. Now that this has also spread into the prime lending markets and is affecting the entire U.S. banking and financial markets the rest of the world views the U.S. as unstable which will further weaken our currency. In order to attract investors to the U.S. dollar and stop it’s downward spiral a higher return will need to be paid and this means rising interest rates.

Until we see the dollar strengthen and stabilize at higher levels we will continue to have upward pressure on the interest rate in the U.S. and thus on the mortgage rate here as well.

3. Increased Risk

Mortgage lending has become more risky in the past year or so due to sharply falling home prices throughout the U.S. Even the typical 20% down payment has not been enough to keep some home owners from losing all equity in their homes and ending up upside down on the loan. What were once considered prime mortgages are now showing up as defaults. In any financial market the response to higher risk is higher returns and this means interest rates on mortgages will rise to offset the increased risk.

The Bottom Line

These factors combined are more than enough to drive the historically low interest rates back up to levels where they are historically average or possibly even worse. While the bailout of the FHA loan backing Freddie Mac and Frannie Mae combined with a Fed that is cutting rates could save us in the short term, it is inevitable that interest rates will rise and take mortgage rates along with them. No matter how you spell it, mortage rates will rise and chances are it will be sooner rather than later.