Getting A Mortgage – How To Qualify For A Morgage
Applying for a mortgage loan is quite an important step in getting a home for many people. However, many are quite adamant about actually applying for the mortgage loan simply 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. If you have filed for bankruptcy, you should wait for at least 2 years since your final discharge date.
2. If you have had an foreclosures, there should have been at least 3 years since the foreclosure had been finalized.
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. Your rental payment history might also be checked. You should have punctual payments for at least, the last 2 years to prove that you pay on time.
5. Usually you might get disqualified for a mortgage loan if the government has guaranteed your student loan to be default. However, there are cases the disqualification may be lifted provided that you have renegotiated your repayment schedule for the loan and you have made punctual payments again for the past year.
6. All of your account that is in a collection status should be repaid prior to the application for the mortgage loan.
7. Judgments ordered by the court should already have been paid in full. Those cases that involve child support should have payments that are current and caught up.
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 usually only account for bonus or overtime pay as part of the “qualifying” source of income if you have had a history of bonus or overtime pay from your present 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 considered.
10. If you have two jobs, your secondary income may usually be counted as part of the qualifying income when you have had a continued history of earning from both jobs in the past two years, otherwise, only one job may be included in the qualifying income.
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. If you are currently being sued, or if you are currently involved in any legal matter such as an ongoing divorce suit, you might have to wait until the lawsuit becomes settled 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 ever month. They do so by fitting 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 importance of having a clean or at least a decent record cannot be over stressed when it comes to getting a mortgage loan. However, if you have had some small stains 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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Pay Off Mortgage Faster Now – You Will Save Money On Interest
August 21, 2011 by admin
Filed under Mortgage Advice
The question to ask is how would it feel to own a home and have no monthly payment? It sounds pretty good, doesn’t it! It is possible to pay off your mortgage quickly and become a home owner that has no mortgage and no monthly payments.
If you have a current mortgage chances are most of the monthly payments you currently have are going to interest, which means straight to the bank. What you want to do is to pay that money strait to your principle, so it goes to you not the bank. It is important that you can lower the principle on your mortgage as soon as possible so you can save tons on interest, again this is money in your pocket, not the banks.
It is easy to do this, you just need to make an extra principle payment on your mortgage every month and you can literally pay off your loan in half the time. Look at this as an investment in your future, you invest in other things in your life, why not make this investment for your home so you can have a mortgage free life.
It is good when you make the extra payment towards principle that you make as much as you can, but a good rule of thumb is to pay a minimum of 3% of your monthly payment, for example if you have a monthly payment of $1500 you would make an extra payment for $45, this will make such a difference in paying off your loans in half the time it will amaze you.
Just remember to write on your check, “for prepaid principle” so they know how to apply it and you are on your way.
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How Can I Get a Mortgage?
So you want to buy a house? Unless you have the money to buy ahouse that you will need to get a mortgage. Today there are many different types of loans and loan programs. There are also a large number of banks, mortgage brokers and lenders.
Before applying for a mortgage there are a few steps to follow.
Determine how much mortgage you can afford. You do not want a house that you can not afford, which means you do want a mortgage that fits your current budget. The first thing to do is look at your income and expenses. Calculate how much you can comfortably afford each month. Remember, you not only have to pay the mortgage; you also have to pay insurance, taxes and other living expenses. Use the Mortgage Calculator to determine how much you can afford each month.
Get the perfect loan. When shopping for a loan you can go to a direct lender, a mortgage bank, or you can go to a mortgage broker. Banks lend money directly, while mortgage brokers can shop around to find the best deal for you. When calculating the cost of borrowing, ensure that you include all the expenses of broker fees, application fees, the credit report, appraisals, loan term and more.
Apply for a loan. Be prepared with information about your income, your job, your assets and liabilities. Prepare your bank statements, pay stubs, tax returns, leases and any investment earnings reports, have them ready. Before completing the loan application make sure you know what’s included in your credit report and your FICO score, there is no doubt that lenders will look at both.
The best way to get a mortgage;
A lender approval of an application for a mortgage loan can provide a greater sense of accomplishment. Unfortunately, getting a home loan can be difficult if not prepared for the process. Lenders take into account factors like income and credit. Knowing what lenders look for when considering your application can help you get approved with some comfort.
• Know your credit history and check your score. Check your credit report by requesting a free copy of credit report annually. Check the report for information, such as collection accounts and late payments that can disqualify a mortgage loan. Get your credit score to evaluate your qualifications Myfico.com.
• Show the sources of income. Make copies of your most recent tax returns or pay stubs to show the mortgage lenders. This information helps lenders determine affordability.
• Improve you credit, if you have a low score before applying for a mortgage. Increase your credit score to 680 before talking to mortgage lenders. Establish a track record of timely payments to prove that you are able to manage credit wisely. Dispute errors on your credit report and quickly make contacts with your creditors to discuss ways to correct them. This method can help improve your credit report within 72 hours and quickly improves your score.
• Reduce your debt to qualify for a mortgage. Too much debt can stop you from getting a mortgage or reduce the amount of loanyou can borrow. Pay off credit cards debt and stop charging new debt.
• Look around and compare mortgage options. Minimum credit score varies depending on the type of loan. Ask an agent to explore all your mortgage options. Applying for free mortgage quotes. Rates allow comparisons between lenders. It is necessary to evaluate different loan terms, interest rates, monthly payments and closing costs.
• Start saving early for a down payment on a mortgage loan. There is flexibility in regard to mortgage loans. Plan to spend between 5 and 20 percent of your payment.
Mortgage debt can not exceed 28 percent of your income, and total debt (including mortgage payment) can not exceed 36 percent of your income to qualify for a mortgage loan.
Buying a home is a major and more expensive purchase than any one that you will do in your life!
You will spend much time researching and finding the perfect home. Decisions may include: the new home located in the suburbs or downtown? Is it near schools? Is it close to shopping and highways? Wheher you have a large kitchen or a large patio complete with a pool and a large cedar deck for Sunday BBQ?
But yet when it comes to finding the best deal for a mortgage, most often just take what is offered to you by lending institutions, rather than ensure the best possible mortgage for your particular situation.
So when you consider that the average homeowner will pay more in interest over the life of his mortgage than the home originally cost, which is vital to do your due diligence and research the possibility of getting a mortgage before buying a home. This step can save you thousands of dollars in interest payments over a period of 20, 25 or 30 years of the mortgage.
Fortunately, research for the best mortgage loan and payment options available today can be found on the Internet. Making this painful process much more efficient and relaxing for you.
All mortgages are not equal
Mortgage loans come in several different ways. You as a prospective homeowner should be aware of them, for you to determine what type of mortgage is best for you based on your particular circumstances.
Mortgages fall into one of the following categories
Mortgage lenders will have different variations of these basic categories and can present them to you differently, but if you’ve done your homework, you will be able to determine and choose the right package just for you based on your age, income, and your credit situation.
What is a Fixed Rate Mortgage;
Fixed-rate mortgages are loans with a fixed interest rate that stays the same throughout the term of the mortgage. Approximately 75% of mortgages are of this type. This is a “fixed rate mortgage” loan often offers the best bid / offer rates for first time home buyers.
What are adjustable rate mortgages and adjustable rate mortgages
An adjustable-rate mortgage is a mortgage where the interest rate is adjusted back and forth or relects the fluctuating rates of Treasury bonds or certificates of deposit. These rates vary according to the weekly treasurey rates.
Adjustable rate mortgages or variable rate mortgages can be an attractive option because rates are lower than fixed rate mortgages. They are an excellent option for borrowers who are aware of the exchange rate and are ready to “lock” their mortgage before interest rates begin to rise. If you have knowledge or keep ongoing monitoring of money markets, this type of mortgage may be the best to deal with.
What is a balloon mortgage;
A balloon mortgage is when the monthly payments are not intended to pay the entire loan. Thus, the final payment is a payment of a large sum of the remaining capital. Balloon mortgages are the only partially amortized and requiring a lump sum repayment at maturity.
Balloon mortgages are very popular in the U.S. for homeowners who are not planning to stay in their newly purchased home for over 5 years. This is because the balloon mortgage interest rate is lower than a “fixed rate mortgage.” But if you decide to stay home longer than a period of 5 to 7 years, then you have to get a new mortgage to pay off the existing mortgage.
1.) Interest Only
An “interest only” payment method can be combined with any type of mortgage you choose. The interest payment periods almost are limited not for the term of the life of the loan, so be ready to place your payments including both principal and interest once the “interest only” period ends.
2.) Principal and interest
your monthly payments will be divided into: a payment of interest and amortization of capital. At the beginning of the mortgage loan, most of the monthly payments are allocated to interest but over time the balance will increase gradually towards the principal, allowing you to pay more capital.
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