Category Archives: Mortgage

Mortgage with poor credit

Purchasing a new home and that also with poor credit is not an easy task. Many mortgage companies will not want to risk their finance to people with bad credit, so the chances of getting a green signal is very slim. Do a little bit of research and you might find a company that can help in your situation.

With the coming of so many banks, there are a large variety of financial packages for people who are looking for mortgage loans. These types of financial packages are specially designed for people with bad credit and the loan approval process has become more straightforward. Many applicants want to get the mortgage loan without having it cost the earth. But there are some issues that needs to be looked into before approval can be secured.

Finding out if the mortgage is affordable

Many people with bad credit do not keep in mind that they should apply for a loan amount that is affordable for them. Everyone wants to purchase a big home and that will cost more money, but if your income is not big enough, then no loan company will approve the application.

It is important to figure out how much you need for the loan and how much you can afford in your monthly payments. You must keep a track of all your income and expenses so that you can figure out how much is your savings at the end of the month, so that it can be applied towards your mortgage payments. If you follow this, securing the loan approval will become a lot easier.

You should also check your debt-to-income ratio before a completely accurate calculation can be confirmed. Your loan amount will depend on your monthly repayments not exceeding the 40% limit in income share for loan repayments. If the rate exceeds, then your application will get rejected.

Putting a larger down payment

Your chances of getting approved for the mortgage loan will highly increase if you are able to put a larger down payment. When you make a large down payment, the size of the mortgage loan will become less and it becomes a lot affordable to pay the monthly installments.

Usually people are able to put 5% of the loan amount as a down payment, but if you are able to pay more, your chances of securing the loan becomes a lot easier.

Finding the right lender

This is the most important part of getting a mortgage loan, especially when you have bad credit and is cost-effective. Online lenders especially like have been mostly preferred than traditional mortgage providers because of their lower interest rates and other charges. If you face a problem in making payments, then you can talk with a reputed loan company and make payment arrangements with them. People with bad credit find online lenders to be a lot easier to deal with because of their packages and other benefits. When you apply for the loan, read the terms and conditions in great detail before signing up to it.

Important tips before refinancing your home

When you are approved for a mortgage, there are different things to keep in mind while you are making the monthly payments. Some of the people may be having a balloon mortgage that is coming due or there are a number of people who are paying high interest rates on their adjustable mortgage. A lot of things which were unexpected in life can happen to anyone. It may be due to job loss or a large hospital bill that has made your current mortgage payments unreasonable. If you are going through similar situation, refinancing your mortgage will be the great way to save your money every month.

By refinancing your mortgage, you can consolidate all your other debts such as credit card balances into one monthly payment at lower interest rates. You may also consider converting some of the equity in your home to cash or use it for other major expenses such as college tuition or home improvement.

  • Before you refinance, ask yourself the following questions:

Always check how long you are going to stay in your home before you refinance it. If you are planning to move soon, refinancing may not be a good idea. Calculate the amount of money that you can save in a month and then compare it and then compare it with the costs involved to refinancing before making your decision. You can find a number of refinance calculators on the internet to make the calculations simple.

Is it possible that you can cash out some of the equity in your home? A good way of using your home equity is done by paying the college tuition costs. You can also use the same amount of money from your equity for other recreation purposes like taking the family to a holiday, but it will be for a short term only with no returns. Keep in mind how long it took you to build up that equity.

Do you need to change your habits? You can refinance your home and use the money to consolidate your existing debts but make sure that you don’t revert back to your old behavior. Just imagine, you used the money to clear your existing credit card debts and later, you again maxed your credit because of poor spending habits from the past does not make any sense.

Getting a mortgage after a recent foreclosure

It is not so easy to get approved for a mortgage loan if you have gone through a recent foreclosure, or at least that’s the way it seems like. If your home is foreclosed, it seems like you will never be able to catch up with the repayments and get your home back. You do not need to get disheartened. There are ways to get your home back after foreclosure and get approved for a mortgage loan also. You should be able to get approved for the mortgage loan within two months after foreclosure.

Due to the downward economy, prices of everything are falling down. This may have been the reason of your recent foreclosure however it also means that when you come back to re-enter in the housing market, cost of the property will not be higher as it was earlier.

You need to build up your credit scores. If you have good credit ratings, you should be able to get approved for a good financial credit in the future and also the cost of any such finance. Review your credit report and get it fixed at the earliest. You should be able to do it yourself. Once you have fixed your credit ratings, you will be in a position to reverse engineer the process and make small changes to your lifestyle and finance that will have the biggest impact on your credit scores.

While you are building up your credit ratings, do not fall into additional debts that can hurt your credit ratings at the same time. Your scores will benefit if you are able to increase your credit limits and not max them out. Once you have improved your credit ratings, you are in a position to apply for a good mortgage deal at lower interest rates.

Calculate your income before buying a home

When a loan officer is reviewing your mortgage application, he tries to figure out how much of the mortgage amount should be approved to you according to your past and present financial situation. Before you go to the mortgage officer and apply for the loan, review your monthly income because the lender is going to count on your income through paperwork.

If you are salaried, and don’t earn incentives, you will be able to do the calculations quite easily. Get your paycheck and see the amount. If you are paid twice a month, multiply the amount by two. If you are paid bi-weekly, multiply the amount by 26 and then divide by 12.

If you are paid on an hourly basis and work for 40 hours in a week without any overtime income, then you will need to multiple your hourly rate by 40, multiply that total by 52 and then divide it by 12. You will get to know the total income in a month.

If you are earning overtime, bonuses, or commissions, then the calculations aren’t that easy. Most of the lenders will not give you any credit based on what you are earning currently. They will do an average of your total income over the last two years, and then add it to your regular salary or hourly monthly income. Or you can see the W2 forms for the last two years. Add them together and divide by 24. It will show your monthly income. This calculation will apply on those also who earn on a part time basis or are a seasonal employee.

If you are self employed or receive 1099 income, then you need to have a track record of the income of the last two years. Lenders will see the total amount that you declared to the IRS to be your income since that is documented. Many self employed show more expenses so that they can keep their income lower. Look at the Schedule C of your tax returns for the last two years and the number at the bottom that says “profit” is your annual income. You can add any depreciation to that figure. Add them together and divide by twenty-four.

These are the variations and exceptions of calculating your total income which will be done by the mortgage officer when he is reviewing your application. You can also do this calculation on your own and see the mortgage amount you qualify for.