When it comes to securing a home loan today one of the biggest misconceptions is that you need to have an excellent credit rating, a large down payment and low debt-to-income ratio with steady significant income. But the truth is home ownership can happen even if you have bad credit due to a foreclosure or bankruptcy or if you have previously been turned down for a loan. Here are some things to keep in mind.
Continue reading “Securing a Home Loan with Bad Credit – Part I”
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So you have some extra dollars and want to know what to do with it? For the purposes of this article, lets assume “spending it” isn’t an option. What are the benefits if I pay down my mortgage vs investing the extra money? When you evaluate the numbers, it boils down to emotion vs logic. Continue reading “Should I Pay Down My Mortgage with Extra Money or Invest?”
The Bank vs Mortgage Lender Difference
Homeowners seeking financing often ask what the difference between a bank and a mortgage lender is when it comes to doing a home loan. Whether it is a refinance home loan or a purchase home loan, there are distinct differences. A bank, as most people are very familiar with, primarily service checking accounts, savings accounts, CD’s, car loans, and sometimes “Home Equity Line of Credit” second mortgage loans. Some may even do first mortgage position loans, though not all. A Home Equity Line of Credit, also known as a HELOC is a secured home loan that is in second lien position to the primary first mortgage loan. This is referred to as a 2nd mortgage. A HELOC is usually a variable rate loan based on “Prime Rate”, which is an index based loan. Continue reading “Bank vs Mortgage Lender: What’s the Difference?”
For any of us interested in qualifying for a mortgage in the near future you should also pay attention to how we are required to file our tax returns. With April 15th fast approaching, here a some tax return pointers to make sure your return doesn’t keep you from qualifying for a mortgage. Continue reading “5 Tax Return Pointers to Help You Qualify for a Mortgage”
Buying your first home is a big investment. Make a mistake and it can cost you hundreds and in extreme cases thousands of dollars. This is why every homeowner should be equipped with a few rules of the road before they begin house hunting. Here are some buying tips for first time homebuyers. Continue reading “Buying Tips for a First Time Homeowner”
Many people have enrolled in a bi-weekly payments program as a means to pay off their mortgage faster. Paying your mortgage payment every 2 weeks as opposed to each month does save you money. Over the life of a 30 year $150,000 mortgage at 4%, it will pay off your mortgage 4 years faster, saving approximately $17,000 in the process. Continue reading “Bi-Weekly Payments: Does it Save on My Mortgage?”
With unemployment rates just under 8%, banks paying less than 1% interest on CDs and account balances and inflation looming many renters today wonder if buying a home in 2013 is a good idea. The key to buying a new home is asking yourself the tough questions and honestly answering them. There are situations where buying a home is a “no-brainer,” but half the battle is recognizing the signs. Here are the signs when buying a home makes sense. Continue reading “Why Buying a Home in 2013 is a Great Idea”
In today’s market, there are 4 types of mortgages available, Conventional, FHA, VA and USDA. Of those 4, Conventional and FHA are the most common so we’ll cover those, (VA mortgages are only available to US Veterans, and USDA mortgages only apply to certain homes in USDA sanctioned zip codes). Continue reading “Should I get an FHA or Conventional Mortgage?”
After the Great Recession, many have been trying to pick up the pieces and move on with their lives, or just get back to where they were. Today we’ll talk about how to qualify for a mortgage after bankruptcy. How to manage your credit afterward, how to manage your finances, and when you can expect to be able to qualify for a mortgage.
Qualifying for a mortgage after bankruptcy isn’t a forever wait. In fact, you can qualify for a mortgage as soon as 2 years after a bankruptcy.
If you’re one of the unfortunate many who have filed for bankruptcy(bk), the road back to credit health starts with which type of bankruptcy you filed. A Chapter 13 bk is easier to work with in that the payback plans helps re-establish credit history, but the 3-5 year payback plan takes your timeline out longer. A chapter 7 is over faster, but it can be more problematic especially if the borrower didn’t reaffirm on any trade lines(or keep any accounts open) after their filing
What do I need to do?
- Re-Establish credit. Get your credit score above 640
- Do not miss any payments
- Pay your rent and other bills by check
- Check your score before your 2 year window opens.
- Clean up any outstanding inaccuracies
Re-Establish Credit
This can be easier said than done. Getting a secured credit card will help. A secured credit card is when you put a deposit down on a credit card to secure the amount of your credit limit. Capital One has a secured credit card program. Other department stores have on the spot approvals with low credit score requirements that can get you started. Their interest rates may be higher, but so long as you pay off your balance at month end, you should be safe. The goal is to have 3 trade lines, plus the payments for where you live reporting for at least 12 months before you apply.
Owning a home is the American dream but home ownership also comes with many responsibilities and some headaches. Here are the top ten things you should know when buying a house.
First, there’s a high transaction cost associated with buying and selling property and you’ll pay capital gains taxes if you buy a house and live there for less than two years. Even in a roaring real estate market you could end up losing money if you sell your home two years or sooner from the time of your original purchase. Buy a home only if you can commit to staying longer than two years.
Continue reading “Top Ten Things to Know When Buying a House”
In “Buying a House in a Buyer’s Market – Part I,” we explored the importance of timing when it comes to buying a house in a buyer’s market. Finding the right house at the right price should be a buyer’s first and final goal with a long term plan of living there as a means of riding out bad market conditions that can occur. This time we’ll take a look at how technology and an experienced buyer’s agent, negotiating effectively and avoiding gimmicks are also essential when it comes to buying a house in a buyer’s market. Continue reading “Buying a House in a Buyer’s Market Part Two”
With falling housing prices, mortgage rates at all-time lows, millions of houses for sale and anxious sellers, many wonder if now is the best time to buy a house or not. In some cases, sellers aren’t just anxious, they’re down right desperate and with the number of sellers far outnumbering the number of buyers, things aren’t as clear-cut as they seem. In fact, this buyer’s market is complicated. Buy too soon and the figures could reduce by the time a buyer secures his mortgage, resulting in negative equity. Wait too long and someone could buy the house you’ve been eyeing for months out from under you. And you don’t want to get sidetracked by market forces that aren’t under your control either. Here are some strategies for buying a house in a buyer’s market. Continue reading “Buying a House in a Buyer’s Market – Part One”
A common question home loan applicants have regarding income qualification of a purchase or refinance home loan is, “Do we make enough income to qualify for a purchase or refinance home loan using just one of our household incomes?”
Using just one of the household incomes can come into play in many scenarios when getting approved for a home loan. For example, Jim, in Arnold, MO is a painter but it is difficult to verify his income or, Mike, in Kansas City, is in transition between jobs but is married and his wife has stable employment. For underwriting purposes, using just one of the household incomes that can be verified may be the best route to get approved for a new home loan, while still maintaining both parties ownership rights to the home. Especially, if it is difficult to document one of the household incomes. Continue reading “Qualifying for a Mortgage with 1 Person of a 2 Income Household”
If you’ve experienced foreclosure you might think you’ll never be in a position to buy another home again. Foreclosure certainly impacts your credit score but it’s only a matter of time before you can once again apply for a mortgage. The question many people have is how long they have to wait before buying a home after foreclosure. How long depends on the circumstances of your foreclosure, your ability to increase your credit score, the type of loan you’re prepared to apply for and the foreclosure waiting period. Continue reading “Buying a Home After Foreclosure”
You hear it all over the radio and see it all over the internet. “Refinance with No Cost”, which sounds a little…errr, maybe a lot too good to be true. Today we will talk about what is a no cost mortgage refinance, how does it work, and if it is right for you. Continue reading “What Does a No Cost Mortgage Refinance Mean?”
In “Getting Ready for Home Appraisal – Part I” we explored the importance of having the right mindset and having your paperwork in order when it comes to preparing for your home’s appraisal. This week we’ll examine other important ways you can get ready for your home’s appraisal.
A big part of preparing for a home appraisal is having your home in order and the time to have any corrections and repairs made to your home is beforehand. Even if you intend to have repairs made but haven’t had time to complete them, having proof of an estimate or scheduled repair to show the appraiser can work to your advantage. Though you and your family may have lived for months with a leaky faucet, damaged window screens, dead smoke detectors or in rooms with poor paint jobs, leaving these maintenance jobs undone can dent the appraisal value of your home. And don’t underestimate the power of curb appeal. A tidy lawn and clean landscape may be the first impression an appraiser has of your home. Continue reading “Getting Ready for Home Appraisal – Part Two”
When the time comes to get ready for a home appraisal it’s important to keep in mind there are factors you can and cannot control. While you can’t control the location of your neighborhood and the value of other homes on your block, you can control what the appraiser sees when he walks up to the front door. Like many things in life, good preparation, careful attention to detail and a dose of fortunate circumstances all play a role in successful home appraisals and there’s a lot you as a homeowner can do to give yourself the best chance for a favorable appraisal. Here are some tips. Continue reading “Getting Ready for a Home Appraisal – Part One”
From radio ads to TV commercials, newscasters and co-workers, lots of people are talking about refinancing. Trouble is not everyone meets the basic requirements for a refinance, nor do they know how to prepare for one. But the good news is preparing for refinance isn’t difficult. More people could meet those basic requirements with a little research and preparation. It’s no different than earning a better score on the SAT or ACT exams for entrance into a better college. The only way to succeed on the test is to know some of the questions that will be asked. The same can be said when it comes to working with mortgage lenders. Knowing what to expect from lenders and familiarizing yourself with their requirements will better prepare you for a refinance and could result in a faster closing. Here are some things to keep in mind. Continue reading “Preparing for Your Refinance”
Though both presidential candidates were short on specifics about their housing policy, refinancing, new mortgage regulations and mortgage interest deduction all won on Election Day. Here’s what President Obama’s reelection means for homeowners.
While Mitt Romney talked about economic stimulus throughout much of the campaign, the Obama Administration made it easier for homeowners to refinance with historic low mortgage rates and plans to make refinancing available to even more borrowers in the next four years. Refinancing gives homeowners more spending money and is a form of economic stimulus. Housing policies that help for folks on the verge of losing their homes are still in the works.
New mortgage regulations are coming like the Consumer Financial Protection Bureau established by the Dodd-Frank Act. Set to take effect by January 2013, these new mortgage standards will trigger legal and financial implications for lenders should a mortgage be judged to be beyond a borrower’s ability to repay. Critics of the Dodd-Frank Act, like Mitt Romney, have argued that such a plan holds back mortgage lending. Legislators will need to strike a delicate balance between giving lenders the incentive to expand mortgage credit while also protecting consumers from high risk loans. Continue reading “What President Obama’s Reelection Means for Homeowners”
With a depressed housing market on the mend, this presents a great opportunity people looking to buy their first home. As is with most first time home buyers, cash is at a premium. Today we’ll talk about a clause in a real estate purchase used to help called seller concessions.
What are seller concessions?
Seller concessions, like it sounds, is where the seller of a home, “concedes” some of their proceeds to help the buyer pay for mortgage and other closing costs and or prepaids on the purchase of a home. The offer to buy the real estate normally comes with a minor upward adjustment to sales price to allow the seller to get to the same net figure. If done correctly, this can reduce the amount a borrower has to bring to closing by thousands of dollars.
How do seller concessions work?
For example, Michelle, in Kansas City is buying a home for her first time. She wants to buy a home for $200,000, qualifies for a 95% mortgage and has roughly $10,000 to put down. Michelle can offer $204,000 with $4,000 in seller concessions. The math works out as follows:
| No Seller Concessions | With Seller Concessions | |
| Purchase Price | $200,000 | $204,000 |
| Closing Costs and Prepaids | $4,000 | $4,000 |
| Seller Concessions | $0 | $4,000 |
| Total Due | $204,000 | $204,000 |
| Loan Amount | $190,000 | $193,800 |
| Due at Closing | $14,000 | $10,200 |
The above example illustrates how offering a higher sales price, but asking for seller concessions to pay for closing costs allows the seller to get to their target sales price but helps the buyer get into their home with the minimum amount of cash possible. The mortgage balance is a little higher but the change to payment is negligible and cash is at a premium.
To conclude, the use of seller concessions will help a buyer purchase a new home when money for closing costs is scarce. This helps credit worthy buyers purchase homes and sellers obtain what they were hoping to get out of their property.