Bankruptcy And Buying A Home – Types Of Bad Credit Mortgage Loans
October 14, 2009 by admin
Filed under Bankruptcy Bad Credit
Buying a home after a bankruptcy doesn’t limit the types of mortgage loans you can qualify for. If anything, you have more loan options with subprime lenders. However, depending on how soon your bankruptcy was resolved, you may find that you pay higher rates and down payments to secure your home financing.
Available Bad Credit Home Loans
In recent years, subprime lenders have come up with a number of new financing terms for home loans. So even with adverse credit, you can still get 100% financing or a 30 year fixed rate mortgage. Interest only loans and adjustable rate mortgages are also good options to increase your buying power.
If you are looking to secure financing over the conventional price caps, then subprime lenders can also offer you jumbo loans. All loan terms are flexible, as well as fees and conditions.
Hurdles Of A Bankruptcy
Right after a bankruptcy, your credit score will require you to put down a sizeable down payment with lenders, usually around 50%. But after the first year, you can reduce your down payment to just 25%. In two years, you can qualify for zero down and conventional rates.
It is only after the first two years of a bankruptcy that your credit score will be significantly affected. After that, financing companies look at other facets of your credit, such as payment history, debt ratio, and employment outlook.
Get A Better Deal With A Better Lender
Subprime lenders compete for your business by offering low rates and fees. While there are certainly some companies that would take advantage of your credit situation, you can protect yourself by being a smart consumer.
Start by researching a number of loan companies. Ask for loan quotes based on your credit and income. After looking at the APR and fine print, you can make a decision on which mortgage loan is right for you.
You can also get pre-approved for your home financing. Not only will it help you in the home buying process, but it will also give you an idea of your financing budget. With online lenders, you can complete your application in minutes and have funds available in as little as two weeks.
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Bankruptcy And Buying A Home – 3 Benefits To Buying A Home After Bankruptcy
October 12, 2009 by admin
Filed under Bankruptcy Bad Credit
Bankruptcy And Buying A Home – 3 Benefits To Buying A Home After Bankruptcy
If you have filed bankruptcy recently, you may wonder if you can get approved for a home loan. You may also wonder if buying a home after a recent bankruptcy is a good idea for you.
While a bankruptcy can make getting approved for a mortgage loan more difficult, it is still possible to get approved for a mortgage loan. In fact, there are more and more bad credit loan programs coming out all the time. Subprime lenders are focusing more on helping individuals with poor credit acheive home ownership. This is happening mostly because bankruptcies are still on the rise and there is an increasing number of people with bad credit who are looking for home financing.
Here are some reasons to consider home ownership after a bankruptcy:
1. Increase Your Credit Score – When you make your payments regularly, you improve your credit rating. Once your pre-payment penalty period is over, you should be able to refinance your mortgage loan for a much lower interest rate. After your bankruptcy has been discharged for over 2-3 years, you should have a much easier time qualifying for a lower interest rate mortgage loan.
2. Accrue Equity In Your Home – If you are just making rent payments, you are throwing your monthly payments away. When you own a home, over time, home values increase and you are working toward owning an asset.
3. Take Out An Equity Loan To Consolidate Debt or Get Needed Extra Cash – Once you have bought your house, as soon as 6 months or so later, you might be able to take out an equity loan on your home and consolidate any other debt that you might have since your bankruptcy or debt that could not be included in your bankruptcy. Taxes and student loans will not be discharged in a bankruptcy. You may also want to use the extra cash to invest in a business venture or for needed home improvement.
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Bankruptcy And Bad Credit Issues No Longer Means No Mortgage
October 11, 2009 by admin
Filed under Bankruptcy Bad Credit
In the past, traditional mortgage lenders have automatically rejected people who had declared personal bankruptcy. Many potential home-buyers felt they must wait at least seven to 10 years after a bankruptcy to be eligible to become homeowners. This is a common misconception for many who believe their chance of home ownership is a long way away.
While some people declaring bankruptcy have had trouble managing their money, a large number of those declaring have simply experienced unfortunate events. Australians are filing bankruptcy at record-high levels over the last five years. The rise in petrol price and the recent increase in interest rates won’t help either.
There are some ominous signs out there…
Though a bankruptcy is certainly a blemish on a credit report, it does not necessarily disqualify a borrower. Recognising that sometimes bad things happen to good people, some select loan officers are becoming more willing to take a calculated risk.
Some lenders use a securing system to determine whether potential buyers are a worthwhile risk. Unfortunately, bankruptcy gives a low rating. However, select lenders are beginning to look beyond the rating and look at the individuals in need.
Instead of waiting two or four years after being discharged from bankruptcy, some mortgage professionals are willing to give a home loan much sooner. Those who have declared bankruptcy liquidation may be eligible for a loan one year after discharge, and those who are in a Part IX debt agreement could also be able to get a mortgage.
Another common misconception is that a previous bankruptcy on your credit report will require you to have a large down payment and pay extremely high interest rates. There are currently programs available with as little as 5 percent down with very attractive rates.
Some lenders are even prequalifying buyers for a loan, saving time and making the home-buying experience easier and more efficient. When a buyer prequalifies they will have the advantage of greater negotiating power.
No matter what the situation, select mortgage professionals have a program that will work for the buyer with a bankruptcy history. If a buyer cannot get approved, there are customized plans that can re-establish credit to help the buyer become mortgage-ready, ensuring home-ownership in the future.
Because of new options, bankruptcy no longer needs to stand in the way of getting a home loan. With the help of more creative lenders, those who have experienced financial difficulty will have an easier time getting a mortgage.
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Bad Credit Mortgage Refinancing – Refinance High Interest Mortgage With Poor Credit
October 9, 2009 by admin
Filed under Bad Credit
With bad credit, you can’t afford not to refinance a high interest mortgage. Working with the right lender, you can trim your loan costs and help your monthly budget. You even have the option to cash out part or all of your equity to pay off high interest credit card debt. Subprime lenders can help you secure financing and reestablish your credit.
Ways To Reduce Your Rates
Even with poor credit, you can lower rates on a future refi loan. Adjustable rate mortgages offer lower initial rates than fixed rate mortgages. Often for two to seven years, rates can be guaranteed. After that, rates are based on an index fund, so they may increase. But with most lenders you can either lock in rates earlier or refinance.
Some lenders will also further reduce your rates if you opt for automatic payment. Your monthly mortgage payment is deducted from your checking account, so you don’t worry about getting a payment in the mail.
The surest way to find low rates is to compare loan quotes. Each lender will offer you a different loan package with varying rates and fees. Base your loan decision on who can offer you the best overall financing. If you plan to keep your loan for seven years or more, consider paying a point or more to reduce your rate even more.
Kinds Of Rates To Expect
The best credit scores, 650 or higher, are eligible for market loan rates. Every 50 point drop, on average, adds a point or two to that loan rate. Closing fees are comparable to a conventional rate mortgage. A bonus with subprime lending is that you don’t have to pay for private mortgage insurance.
Where To Find Subprime Lenders
Most financing companies now offer subprime financing to those with adverse credit. You can start your loan search with a mortgage broker. Simply mark that you have poor credit on your loan estimate form, and they will connect you to several competitive lenders.
Another option is to go directly to the lender sites. Either check their market rates on the homepage or request a quote. Make sure that you also note closing costs and fees. You don’t want to get caught on early payment fees either.
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Bad Credit Mortgage Refinancing – Refinance And Improve Credit
October 6, 2009 by admin
Filed under Bad Credit
Many homeowners have a goal of improving their credit. Despite efforts to maintain a good credit rating, situations arise that can have a damaging affect on our credit. A common problem involves acquiring too much debt. In this case, some homeowners are unable to keep up with minimum monthly payments. Skipping or submitting payments late will reduce your overall credit rating. Fortunately, there are options for improving credit.
Benefits of Refinancing a Mortgage with Bad Credit
Today, many homeowners take advantage of refinancing to help improve their credit. Refinancing can serve a two-fold purpose. For starters, applying for a new mortgage may help you obtain a lower interest rate or convert your adjustable rate mortgage to a fixed rate. Additionally, those who refinance have the option of borrowing some of their home’s equity. This money is dispersed into a lump sum, and the amount wrapped into the new mortgage
How Does a Refinancing Improve Credit?
Many factors contribute to bad credit. If you are unable to pay creditors, have excessive debts, and several collection accounts, this will reflect on your credit report.
When a potential lender reviews your loan or credit request, negative credit report information may result in credit denial.
Because mortgages are collateral-based loans, it is easy to get approved for a refinancing with bad credit. Furthermore, because of low mortgage interest rates, it is possible to obtain an acceptable interest rate with a bad credit refinancing. If you purchased your home before rates began to fall, you may still obtain a lower refi rate.
To benefit from a refinancing, you must cash-out at closing. The money can be used for a variety of purposes. Make necessary home improvements, plan your retirement, or begin a college fund for your children. However, if you are hoping to improve your credit, the money should be used to payoff or reduce credit card balances.
Bad Credit Refinancing Lenders
If refinancing your mortgage with bad credit, select a bad credit lender. These lenders are devoted to finding the perfect loan program for you. For the lowest possible rates, consult several bad credit lenders. Explain your situation and needs. Next, request quotes from these lenders. Quotes will consist of interest rates, estimated monthly payments, and fees due at closing. The final task involves picking a lender to handle your refinancing.
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Bad Credit Mortgage Refinancing
October 4, 2009 by admin
Filed under Bad Credit
Bad credit mortgage refinancing loans are used to solve two different problems.
Problem Number One: The homeowner has bad credit, significant high interest credit card debt and a home with substantial equity. In order to pay off the high interest bills, the person refinances his/her home and cashes out all or part of the equity. The cash from the equity is used to pay off the high interest obligations. Although the interest rate on the bad credit mortgage refinancing loan may be higher than that of a conventional loan, the house payment should still be less than the total of the high interest consumer debt.
A bad credit mortgage refinancing where the owner intents to use the cash from the home’s equity to pay off bills is called a debt consolidation loan. The value of the home being refinanced must have grown so that the home’s appraised worth will justify a larger loan. The new loan amount must be high enough that the owner can cover the loan’s closing costs and still have enough left over to pay off the credit card debt.
A bad credit mortgage refinancing such as this can have several advantages. The term of the loan will be longer. Since even a high interest subprime loan carries a lower interest rate than do high interest credit cards the new house payment will be smaller than the total of the old house payment and the consumer debt payments. However, choosing to refinance in this manner carries risks. If the homeowner does not change the behavior that led to the high debt, even more high interest credit card bills may be accumulated. Since the homeowner’s equity has already been “cashed out” of his/her house the only alternative in a money crunch may be bankruptcy or foreclosure.
If a homeowner chooses a debt consolidation loan as the method of bad credit mortgage financing, it is imperative to use the cash received to pay off the accumulated debts. Credit counseling to keep from returning to poor credit practices should also be considered.
Problem Number Two: The homeowner had bad credit when the home was originally purchased and had to take out a high interest subprime mortgage loan at that time. Two or more years have passed since the loan was made during which time the homeowner has made all of the loan payments on time and has incurred no other bad credit. Now the time has arrived to refinance the loan and receive a better interest rate.
Even with two years of excellent credit history, a homeowner trying to refinance a bad credit mortgage may not be able to obtain a conventional low interest loan. The type of loan that can be attained will depend on a variety of factors such as current income and how much debt the homeowner has.
Refinancing a bad credit mortgage under these circumstances may be a good idea if the following two statements are true.
1. The new loan will carry an interest rate two or more percentage points lower than the current loan.
2. The homeowner plans to stay in the house for three or more years.
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A quick guide to remortgage
October 2, 2009 by admin
Filed under Re-Mortgage
Remortgaging means that we are taking a new mortgage to repay an existing one.
As time passes, the appreciation in property rates raises the home equity available at the disposal of the homeowner. Remortgaging utilizes this increase in property valuation to get a better deal on debt, or some extra money. Remortgaging does not involve selling or changing homes, but the debt may be transferred from one lender to another.
There are instances, when we require funds for some new construction, such as an extra bathroom, new kitchen, additional bedroom etc. Many times we find that some of our existing borrowings, charge higher rates of interest than those charged by our mortgage lender. In such cases, we can use the additional home equity available with us to provide funds and ease the repayment burden by remortgaging.
US, in recent times has seen a sharp decline in mortgage rates. Therefore, more and more homeowners having existing mortgages, are applying for a remortgage to take advantages of the lower rates.
Remortgaging has become an easy process due to the increasing use of information technology in the lending process. People can now apply online for a remortgage right from the comfort of their home or office. This has significantly reduced the time and effort for getting a property remortgaged.
Considering the reduced interest rates and easier repayment options, the homeowners often see remortgaging as good source for generating capital. Changing high interest debts into low interest remortgage with easy repayment terms is often, quite lucrative for the debtors. By changing their debt type they can significantly reduce the repayment burden.
There are many lenders in the UK market, which provide competitive remortgage offers. Since, remortgages are used to move debts; it should be seriously considered that the cost of moving debts should not offset the savings in any such process.
The redemption fees, is the biggest cost to be incurred while taking a remortgage. A redemption fee is what a person has to pay when he ends an existing mortgage contract and applies for a remortgage. There are early redemption penalties, which escalate the overall costs of remortgage. These penalties are the largest when the debt is still new. Generally, remortgaging is not advised when such penalties are very high, but if you have a particularly good offer, which offsets the loss due to the early redemption penalty, you should consider it.
In addition to the redemption fee, there are many other costs involved with remortgaging. Some of which are discussed below:
· The new lender who will provide the debt will like to reassess the value of your property to make sure that it is not a risky deal for him. So, he might charge some valuation fees for this process.
· The entire remortgaging process has a legal angle attached to it. This might involve legal consultation fees. In addition to these, the lender might include the conveyance and other office charges.
The debtor should consider these fees while remortgaging. Options are available, where the lender might refund all or a part of the valuation, legal and office charges to the debtors, if the repayment schedule is exceptional. Be sure to ask your lender about such an option.
Remortgaging does provide funds with low interest and easy repayment options, but there are many drawbacks associated with it.
The debt repayment process again starts from the scratch. Short term savings might lead to a long term financial liability. The interests although relatively lower now must be paid over a longer period of time, and again the fact to be kept in mind is that any serious default in payments might lead to repossession.
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