How Can You Qualify for a Mortgage Loan
Obtaining mortgage loan is quite an valuable step for many citizens. However, many are quite unwavering about actually forwarding an application for the mortgage loan only because people are not sure what they need to qualify for one.
The qualifications of a mortgage loan are actually not that complicated. Here are some of the general guidelines of how you can qualify for a mortgage loan:
1. You should wait for at least 2 years since your final discharge date, if you had gone through bankruptcy filing
2. You should wait at least 3 years since the foreclosure had been Completed, in case you have had a foreclosures in the past.
3. You should have had no late payments with your previous credits for at least one year (12 months). But if you have had a great credit record for several years and you had some little occasions of late payment, your application might still be considered. Usually, lenders watch out for late payments that are 30 days behind or more.
4. Lenders will check your rental payment history. You should have regular, on time payments for your rental residence for at least, the last 2 years to prove that you pay on time.
5. If the government has established your student loan to be in default, it is possible that you are not found to be a qualified applicant for a mortgage loan. However, there are cases the disqualification may be waived provided that you have entered into your repayment negotiations to schedule for the student loan and you have made punctual payments again for the previous year.
6. You should pay any outstanding collection payments prior to filing you application for the mortgage loan.
7. If you are subject to cases that involve child support payments, your payments should be current and caught up. All court ordered judgments should have been paid up to date.
8. If you are self-employed or your income is based on commission, you would usually need to have been receiving a steady income from that source for at least two years in such a way that the lender would be able to account for your average income. There may be some exempted cases, however.
9. Lenders would generally only take into consideration rewards or overtime pay as part of the “qualifying” source of earnings if you have had a history of rewards or overtime pay from your current employer for at least a year or two. Your employer should verify how much overtime hours you have served or how much bonus income you would be getting for such sources of income to be taken into account.
10. For income from a second job to be considered as part of your qualifying income, you have to have a long history of at least two years receiving that second income as part of your toal earnings.
11. If you have been receiving income through child support, you should have been receiving income consistently. You would be required to submit a history of the payments made for the child support. Usually, if your child support status has just been awarded recently, it might not be considered as a qualifying source of income.
12. It is not advisable to apply for a mortgage loan while being involved in a lawsuit or any legal matter. You should prospone your application until that legal matter is settled and resolved before you could apply for a mortgage loan.
What is the point of these qualifications? Lenders carefully scrutinize your qualifications in order to ascertain how much the maximum amount of money you could afford to pay them every month.
They do so by plugging your information into certain formulas that give fairly accurate predictions. Should these predictions prove that you can afford to pay the monthly dues that will be stipulated by the loan, you are most likely to be granted the mortgage loan. The significance of having a clean or the slightest a perfect record cannot be overemphasized when it comes to getting a mortgage loan.
However, if you have had some small imperfections in your record, lenders provide considerations such as specified above. Knowing these, you can pretty much estimate if you would be able to qualify for a mortgage loan or not.
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Home Mortgage Services You Can Avail Of
Homes are regarded differently by different kinds of people. Some see it as their biggest possession. Some believe it to be an investment that in time would give them a substantial income return. And some attach personal values in their houses and associate it highly with their family. No matter how you see your house it really won’t matter.
It is a given fact that houses have monetary equivalents and can be used for mortgages.You can buy a house through a mortgage. You can also mortgage a house to get cash. The different home mortgage services you can apply to your houses are these:
1. Fixed rate mortgage. With this type of mortgage, you compute for the principal loan amount plus the fixed interest for the term of the loan. Then you pay it in equal installments until you cover the whole amount.
2. Variable rate mortgage. This one works basically the same thing as the fixed rate mortgage. Only, it has a variable interest rate. But you still get to pay a fixed amount. But the principal is paid depending as to how high the interest is for the month.
3. Lot loans. Are you ready to buy a land but is not yet ready to build a house. Then get a lot loan. Through it, you will be secured that you own a piece of land in the neighborhood you desire. And you can always build your dream house there when you’re ready.
4. Rural Housing Mortgage Services. If you belong to the low to moderate-income borrowers within a rural area, you can avail of this loan. They offer fixed principal as well as interest payments. They also require very low down payments.
5. One-Year Adjustable Mortgage. This type of mortgage service presents a discounted interest rate for the initial year. But its value, along with the principal, rises yearly throughout the term of the loan. This loan is good for people who intend to sell their house for a return of investment in the future.
6. Interest First mortgage. In an interest first mortgage, borrowers are required to pay the entire interest of the loan on the first year. Then the proceeding amortizations are supposed to cover the principal in the next few years of payment.
These are six different home mortgage services, which you can avail of from your trusted financial company. Your house is surely one possession you can do so much about.
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Tips on Looking for a Home Loan Mortgage Company
February 10, 2009 by admin
Filed under Home Loans
People who need to get a loan will soon realize that banks are not the only ones who can lend money to a customer. There are also home mortgage companies who can also offer the same service to the person. There are two ways for the individual to find a home mortgage company. The first will be to do this without anyone’s help. The second will be looking for a middleman or a broker who will do all the legwork.
In any case, the applicant will have to shop around for a firm that is offering it at a reasonable rate. Those who have never done this before should be accompanied by a friend because the lessons learned will prevent the individual from making the same mistakes. The person will notice that home mortgage companies can be found in the phone directory, the newspaper and on the Internet.
The best of these is probably the one found on the web since there is a home calculator that can be used to figure out the amount that has to be paid monthly if the individual chooses to get a loan from this firm. Regardless where the home mortgage company was found, the person will have to narrow this down perhaps to five from the ten or twelve that have sent a proposal to the home.
This will make it easier to review before meeting a representative and asking some hard-hitting questions. This includes finding out how these firms are compensated. Some of these home mortgage companies will charge a flat fee while others make money by getting a percentage from the amount of the approved loan. If the payment is reasonable, the individual should also ask for a few names of past customers who have transacted with this firm.
These people will be able to tell if the service provided was adequate enough to suit the needs of the customer. Should there be no problems, the person should also check with the agent if this is the best package to get. The home mortgage company may have something better to offer to the client. Getting a home mortgage loan is easy.
The challenging part is finding a company that is there to help and not just get money from the customer. Those who are successful will just have to fill up the forms and wait a few days to find out if the request has been approved.
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Home Equity 101 – What You Need To Know
February 10, 2009 by admin
Filed under Home Loans
People who are not able to earn that much working or have bad credit will have a hard time getting a loan from a creditor. The only way to borrow will be through home equity that uses the house as collateral.
Lenders perceive home equity loans as relatively safe. This is because the bank can simply confiscate the house of those who fail to pay. Studies have shown many avail of this to consolidate high interest debts, finance the purchase of a second home, pay for the tuition in college and renovate or remodel the house.
Despite the risk of losing the house for those who are unable to pay, many still avail of this because it is for anyone to qualify for and get a huge amount. The interest rates are very affordable and this can be written off as a tax deductible. One program that is gaining popularity is the 125% equity home loan.
This is considered to be a second mortgage that allows the individual to borrow one fourth of the value of the home. If the house is worth $100,000, this allows the person to borrow up to $25,000. Many of these firms can be found online.
The individual may only qualify after achieving a certain credit score and under certain guidelines, which is up to the lender. The basis for those who qualify for this loan will be up to the lender.
These firms can look at the length of time the homeowner has lived there as well the individual’s current credit score. These things will influence the amount that will be given when the application has been approved.
The lender will not require the applicant to have the property appraised when requesting for a home equity loan. The purchase price will be used as the indicator if the person has lived there for less than a year.
An automated value model, recent tax assessment or simple drive by appraisal will be utilized if the applicant has lived there for a number of years. A home equity loan may last from 10 to 30 years. It is best to shop around and compare the rates of various lenders before signing anything on paper.
Everyone in the household must understand what will happen in getting this type of loan. This means making some sacrifices to cut down on costs to be able to pay on time rather than losing the house.
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Qualifying For A Home Mortgage Loan
February 10, 2009 by admin
Filed under Home Loans
Is Now the Best Time to Buy that House?
Find Out First If You Qualify Buying a house is both exciting and scary, especially for the first-time buyer. Most people prefer to factor in timing, in order to get the best rates. But other than being able to understand market trends, there are other things you need to look at to see if you qualify for that home mortgage. You have a steady source of income. Examine carefully your current cash flow.
Qualifying for a home mortgage means you are capable of a long-term payment commitment so you will need to consider your situation years from now. Try to foresee future expenses, plans, job movements and changes. You have enough money saved to last you at least three to six months in case your income source is cut or interrupted.
This means that you can continue to pay for your mortgage (along with other bills) and the lender has nothing to worry about. Your debts are under control. Sure you still make monthly payments on that student loan and that credit card and you still haven’t paid up the car loan, but if your debts are consistently paid with no bad marks at least a year or two from today, then you’re looking good.
That means you can be trusted. Your monthly total debt payments (mortgage, loans, credit cards) remain below or well below 38% of your gross monthly income. This shows the lender that you are capable of paying responsibly and that a home mortgage will not drive you to bankruptcy. If your credit history is less than perfect, it will not automatically disqualify you for a home mortgage, but a good history means paying lower interest rates and monthly mortgage payments.
Before talking to a lender, check your history from one of the three credit bureaus. There might be some errors you need to correct or you might want the best arrangement that can lift your credit rating a notch higher. You can afford to pay downpayment. You will need a sizable amount of cash to pay downpayment for your house of choice. That’s 20% of the total price. You may also choose a low or zero downpayment scheme, but it may not be cost effective in the long run. Decide to buy when you’re ready.
A house is probably the biggest financial decision you will ever make in your life so be sure you go into it when you yourself feel that you can handle the responsibility. All that timing in order to qualify really depends on you.
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Comparing A Fixed Rate Mortgage and A Variable Rate Mortgage
February 10, 2009 by admin
Filed under Mortgage Rates
With the various options in the industry nowadays, this is probably the most confusing time for anyone who is considering to avail of a mortgage. Moreover, interest rates seem to be constantly fluctuating and this adds up to the confusion in getting the best option. Generally, there are two major types of loans. These are the fixed rate mortgage and the variable rate mortgage.
Both types have their own advantages and disadvantages which anyone should consider carefully. A fixed rate mortgage makes the monthly payments the same all throughout. Interest rates do not change whether or not there is an increase in the industry. What was set at the very start continues until the entire loan has been paid for. On the other hand, a variable rate mortgage paves the way for some adjustments in the interest rates. If the rates are higher now, monthly payments will increase as well, as regulated by a certain interest index. Advantage comes in when the rates decrease at a certain period of time. If you are after stability, fixed rate mortgages are most suitable.
However, if you are willing to gamble a bit and hold on to both possible risks and rewards, variable rate mortgages may be appropriate. The previous years had shown significant decreases in interest rates. Such phenomenon has prompted a lot of people to prefer fixed rate mortgages. In this way, they have been able to preserve such stable interest rates over a period of time. Fixed rate mortgages may run from 6 months to 25 years but the agreed upon interest rates are guaranteed in spite of fluctuations in the market. Security and stability are indeed not a question here so this is best for those with limited and fixed monthly incomes.
However, if you prefer a short-term option, variable rate mortgages seem to be best for you. With this type, you do not have to commit to a certain interest rate for a very long period of time. There is more flexibility. Moreover, a variable rate mortgage gives the borrowers an opportunity to make the most out of lower rates. The interest rates are normally determined by subtracting a set percentage from a prime rate which is actually what banks usually offer only to their most creditworthy customers. This is, in fact, a source of potential savings that attracts a lot of borrowers.
Studies have shown that although rates are fluctuating, variable rate mortgages still contribute more savings over a fixed one. Most people are simply afraid to take risks that is why they opt for a more stable one. However, statistics show that variable rate mortgages are more advantageous over fixed rate mortgages 88% of the time.
In addition, if you have plans of selling your home after a number of years, variable rate mortgages will work best for you where equity is easily built. You can even opt to get a balloon mortgage which starts as variable and stops at a certain point. At such period of time, you will be required to settle the remaining balance in full and payment may come from the sales that you have generated out of selling the home.
To be able to know further which is better, it is always advisable to consult an expert in this area. Such expert can provide information on the movements of interest rates. He can also provide some insight on the interest rate climate which may then lead to the consideration of the option that matches well your financial situation. Nevertheless, do not expect that the process shall be easy.
Understanding the interest climate is not straightforward as there may be several influences in the current market. Foreign exchange, inflation, bond and equities markets, and foreign treasury policies are just some of the major considerations that experts look into. Indeed, both types have pros and cons. It will then be up to you how you shall evaluate these but it is always important that you know your financial status as well as your plans for the future. Your evaluation must be as realistic as possible so that you will not end up carrying a burden that is too difficult for you to handle.
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How to Pre-qualify for an FHA Home Loan
February 10, 2009 by admin
Filed under Home Loans
FHA home loans are mortgages that are insured by the United States government, more particularly the Federal Housing Administration. FHA in itself does not make the loans. What they do is that they insure the loans that were in turn, given out by their qualified group of commercial lenders.
With the introduction of the FHA home loan, a lot of low-income Americans were able to secure a loan to purchase their homes. FHA home loans are conceptualized in 1930′s during the time of the Great Depression. The government acted to subsidize loaning programs through FHA in response to the growing rate of defaults and foreclosures.
The good news is that FHA is for every American. But they have to follow the set guidelines in applying for it. To know if you qualify for an FHA home loan, here is a checklist that you can use. See for yourself if you can take advantage of FHA’s easy mortgage loan plans.
1. First and foremost, you should have a steady employment history. By this, you should be able to prove to the agency that you have at least two years of service with your current employer. Stability of job and income is the main factor. That’s the primary requirement of FHA.
2. You should have an increasing income, or at least, a consistent one. So that FHA can correctly assess your capability to pay, you should show them that in your current job, you are earning a fixed amount. And if in case it is not the case, your income should follow a steady rising pattern, not a fluctuating one.
3. You should be able to boast about your credit history. Your credit report definitely says a lot about your financial status. It is FHA’s requirement that all their applicants are in good credit standing. And not only that, they also require that there is not a single payment over due for more than a month within the last two years in their credit reports.
4. You should also show that you’ve got no history of bankruptcy. Or even if you had, it should be at least two years before. You should also show and that you already had regained financial stability for the past two years. You should be in a good credit standing for two consecutive years.
5. Your foreclosures, if any, should be three years old at the very least. This one follows the same principle as the bankruptcy rule stated above. It is a must that for the past three years, what you have is a good credit standing.
6. You can only apply for a loan that is 30% of your total monthly income. If you have everything else worked out, remember this last important detail: FHA will approve you a loan corresponding to your gross income. So, do not apply for one that exceeds 30%. Your application will just be denied. Look and settle for a house that is just within the set limits.
These are the different points to consider when applying for an FHA loan. You should qualify in the every step stated here. These are the exact guidelines that FHA is currently following.
But you have to know that pre-qualifying for the loan is just the first step. It is not a guarantee of anything. All it means is that FHA will merit a review of your application and proceed from there. Your dream of buying the perfect house is still in the cooking stages, so to speak.
Pre-qualification is the first step to getting a loan, though. Needless to say, it is an important step altogether. If you don’t pass the pre-qualification stage, there is no way that you will be able to purchase the house that you always wanted, at least not through FHA.
What the pre-qualification step really does is that it assesses your income, your assets, and your ability to pay. After which, you are to show it to the lender waiting on the wings. Then they further study your case. You’ll get the loan once they see that you are indeed, financially stable.
With all these said, go ahead and start evaluating yourself for an FHA home loan. Take advantage of what they are offering today. This is your chance to own the house of your dreams. Take it while it is still there.
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Getting A Home Mortgage Despite Having Bad Credit
Most Americans live on credit day and day out. It’s not just those pieces of plastics that keep them going although it is a very common form of credit. To most Americans, having a good credit reputation can mean a good roof over their heads. Like most people, Americans are looking forward to that day when they can finally call their abodes their own.
Not all people are born rich and they cannot afford to build their homes in cash. Most people have to rely on credit to give them good homes. A home mortgage is every American’s lifeline if they want to build a home for their families. Those who have good credit ratings are lucky because they can easily get a home mortgage without sweat.
But what about those who have missed some payments or made some bad financial decisions in the past? A lending company will always want to get a good view of an applicant’s credit rating before he is even considered for a home mortgage. A good credit rating is very important because it is most often the deciding factor in getting a loan approved.
A person who has a bad credit rating should not however feel depressed because there is a chance that he can still get a home mortgage. The question to answer is how bad is bad? A person’s worthiness will usually be judged on the basis of his credit score. Any person who has a credit score of 620 or less is bad credit material.
The credit score is obtained by home mortgage companies from a document known as a credit report. It actually contains the credit history of the borrower and it will be an important determining factor whether or not loan companies should approve the loan.
Various lenders have different standards and policies when it comes to credit ratings. A person who has a bad credit should look for a lender with a more flexible lending guideline. A person gets bad credit when he has unpaid car or student loans, piling bills and late payments that are reflected on his credit report.
There are people out there who have unpaid responsibilities but still get their home mortgages approved. A person with a bad credit score should get a copy of the credit report and look for inaccuracies in the report. If some entries are disputed then check it out and have them removed if possible to increase the credit score.
But not all people have bad credit scores because they have unpaid bills. Some get bad credit scores because they actually do not have enough credit. If this is the case then apply for a credit line with an establishment that requires a flexible credit guideline.
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How to find poor credit home mortgage lenders
What are your options if you have very poor credit yet you so desperately need to buy a house and have a home you could call your own? Relax, there is a solution to your problem.
Though having poor credit would usually make home purchasing a tad hard, it is not entirely not viable. The following are a number of the options one may possibly consider in finding poor credit lenders. Ask, ask, ask It is okay if you ask the seller to be the one who will hold the housing loan.
If in case the seller somehow still has money to be paid on the house, it is achievable to buy a mortgage wraparound. Basically, this type of mortgage allows one to make a payment every month on a mortgage that is existing as well as supplementary payment that will cover the other balance.
Pursue an option for lease Via pursuing an option for lease, this allows one to set the current purchasing price as well as apply a small portion of a particular rent every month towards the down payment.
After each lease interval (usually between twelve to thirty six months), the prices should then have gone up and be supposed to have equity accrued. Be aware that if such an option is not utilized, funds paid to a particular seller will not be returned. Increase, increase, increase.
It is okay to increase the price you are more than willing to pay to a particular seller. After which, asking the seller to credit the money to you back in order for that to be utilized as a down payment for cost closing is completely fine. Do not be afraid to borrow.
Borrowing funds from relatives and friends would help in defraying costs for closing as well as in increasing down payment. Also, borrowing from retirement or pension plans is another way to increase down payment..
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A Home Mortgage Makes Dreams Come True
Getting a house of your own is a lifetime achievement and a home mortgage helps you in achieving this milestone much earlier than it would otherwise have been possible. In fact, the first home mortgage is also filled with a lot of emotion. A home mortgage is really something that makes dreams come true. So let us start with understanding what a home mortgage actually is? A home mortgage is something that allows you to buy a house even if you do not have enough money to pay for it right away. This is made possible by borrowing money from someone and paying it back in monthly installments.
The person who lends you money is called the home mortgage lender. The home mortgage lender lends you money for a specific period (up to 30 years) during which you are expected to pay back the money in monthly installments.
There are certain terms and conditions associated with the home mortgage agreement and these terms and conditions govern the home mortgage throughout its tenure. Among others, the most important thing is the interest rate that the home mortgage lender charges you. Interest charges are the means through which the mortgage lenders earns on this financial transaction called home mortgage.
Most home mortgage lenders offer various home mortgage schemes/options. The most important variation in these schemes is in terms of the interest rate and the calculations related to it. In fact, most home mortgage options are named after the type of interest rate used for that option.
Broadly speaking, there are two types of home mortgage interest rates – FRM (fixed rate mortgage) and ARM (adjustable rate mortgage). For FRM, the interest rate is fixed for the entire tenure of the home mortgage loan. For ARM, as the name suggests the home mortgage rate changes or adjusts throughout the tenure of the home mortgage.
This change or adjustment of mortgage rates is based on a pre-selected financial index like treasury security (and on the terms and conditions agreed between you and the mortgage lender). That is how mortgage works. No matter what type of home mortgage you go for, you always need to pay back the entire home mortgage loan (with interest) to the mortgage lender.
Failing to pay back the mortgage lender can result in foreclosure on your home and the mortgage lender can even auction it off to recover the remaining debt.
Therefore, home mortgage is a wonderful means of getting into your dream home much earlier in your life. Without this concept, you would have to wait for a long time for getting into that dream home. Really, a home mortgage is one of the best concepts from the world of finance.
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