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By On July 8, 2010
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Getting a loan these days can be difficult but there are some things that you can do to improve your chances. Basically you want to reassure the lender that you are good for the money and here are some ways you can do that. The day of application is too late for improving your FICO credit score but there are still some things you can do to improve your chances.
Do your homework upfront, get all of your documents and financial papers in order
Approach your loan application as you would an important job interview and dress for success. First impressions are important and you want to send the message to the lender that you are a serious person who can be relied on to repay their debts. If you don’t look like you take care of your appearance then you are sending the message that you won’t be able to look after your debts either.
Have All Your Paperwork Ready
Failure to have your paperwork ready will not only slow down your application but it will also send a bad impression to the lender. Prepare fully and make sure that you have such things as photocopies of pay slips and other documents that they will want to see. It is better to bring more documents just in case then to be missing anything, but make sure everything is properly organized so that you are not shuffling through an untidy bundle of paper.
Be Prepared to Answer Questions
If you sound vague or hesitant it will make the lender cautious so make sure you prepare well in advance. Use a recording device and practice answering the most likely questions. Make sure that you can answer the following questions;
Why do you need the loan?
How do you plan to repay it?
Exactly how can you make the repayments?
What guarantees can you offer?
What is your history of borrowing money?
When answering these questions you want to sound confident so that you reassure the lender.
Try and Build a Good line of communication with the Lender
It is a good idea to build a good rapport with the lender, but you don’t want to appear like a clown. Your aim should be to come across as sincere and likeable, and of good moral character.
Getting a loan these days can be difficult but hopefully the above tips will make it that bit easier.
By On May 10, 2010
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If you have been dreaming of the day when you can at last buy your own home and finally think you have arrived, there are some things you should know about your mortgage loan that can save you a great deal of money on your dream house. Right now, the price of real estate has been dropping and it might be the right time to act in the real estate market. One of the biggest mistakes buyers making, is allowing their lender to direct them to a preferred lender, often resulting in higher rates or fees and a potential kickback to your agent. Take control of the lending process and start your search for a mortgage lender by hopping online and dealing with a direct representative or visiting a local credit union.
Lower interest rates save you a great amount on your monthly payment. When you are shopping for a home mortgage, of course the goal is to get the lowest possible rate. Right now the price of homes is low as well as the interest rate. It is not expected to stay at this low rate so those who were thinking of getting into real estate should make the leap now while the cost is low.
Careful consideration when shopping for a mortgage broker is the most important aspect of your home financing. You must look for a broker that does not charge exorbitant fees and who will give you the most reasonable rate on your interest.
You will have to decide on a fixed rate mortgage or an adjustable rate mortgage. An adjustable rate mortgage will start with lower interest rates, but it could go up after a specific amount of time. For those who are expecting a large amount of money in the coming years or if you plan to refinance the mortgage later, this is a good choice. Many people enjoy the lower interest rates in the beginning without planning for the time when the mortgage will adjust. This results in higher payments and for some people, it can mean the difference between making the mortgage payment and not.
A fixed rate mortgage will cost more in interest, but the payments and interest will remain steady for the life of the loan. This is the best choice for those who want reliability in their home budget. The higher price is worth the peace of mind that comes with a fixed mortgage rate.
Shop around for the right lender to provide your mortgage loan. A house is a big expense, and for many it is the biggest expense they will have in their lifetime. Consider your budget and what you can afford to pay each month. Sound financial planning is necessary when you are buying your first home. Make sure that your dream home stays a sweet dream.
By On April 20, 2010
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The Obama administration recently had announced an extension the mortgage refinance program that helps homeowners who are in a financial crunch. In fact, the response has been so huge that nearly 200000 Americans have refinanced through the Home Affordable Refinance Program, The initiative intends to help 4 million to 5 million borrowers with loans given through Fannie Mae or Freddie Mac, the federal mortgage financing companies
It would be difficult for homeowners to refinance otherwise, because their loan to value ratio is too much. The program benefits homeowners by doing way with the closing costs associated with refinancing a mortgage. Though it was supposed to expire in June, the good news is that it should extend through June 2011.
Let us go through the requirements that are needed to qualify for Home Affordable Refinance Program. First of all, you must prove that you have suffered a financial hardship due to the mortgage. So if you are looking for the program to help you make mortgage payments, just because they are beyond your means, you may not qualify. You have to prove a hardship like for instance, a job loss, losing a huge part of your income, extremely unmanageable mortgage interest rate.
To be eligible for either the refinance or home loan modification which alters the interest rate or lengthens the tenure, the original loan has to originate before January 2009. The loan modification must be applied for and approved by December 2012 while the refinance should be done sooner, as the program may end by June 2011. Though initially, the program was for borrowers whose loan balances were marginally higher than their property values, the program now accommodates people who owe up to 25 percent more than what their homes are worth.
Since these underwater borrowers are at high risk of foreclosure, the administration hopes that by lowering their payments, they would not risk losing their homes. Your loan amount must be more than 105 percent of the present value of the home in order to apply for the refinance. The interest rate stands to become less from 6.5 percent to 5.16 per cent. The cumulative total of all credit payments taken together must not exceed 55% of the pretax income of the borrower. The government has declared a $1000 cash benefit for financial institution, banks and mortgage companies per loan modification and refinance, which is a good incentive for banks to help you in this crisis situation. You can also make use of help from the HUD appointed counselors, who represent you in the bank matters and present your case favorably.
They do not charge you because their fees are paid for by the Federal government.
Since the existing mortgage rates are low, it is a relief for distressed homeowners as they can make the switch to secure lower interest rates. The Obama Mortgage Refinance Program has put an end to the creditors who would stay away from lending risks
By On March 28, 2010
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Everyone desires to have his own home. However, the financial condition of most people is not stable enough that they can make full payment at one shot. Hence, most people apply for a mortgage in order to buy their dream home. In order to fill a mortgage application form, you need to visit your lender and ask him to provide you with a home loan application.
If you do not know how to fill the form, you may end up making many mistakes which will only delay the approval of your loan.
Here are some steps on filling out mortgage application form:
1. Make sure you have all the following information with you:
> Social security number
> bank statements
> credit card statements
> loan statements
> asset information and all the latest pay stubs
2. Do not fill 1st section (Type of Home Loan and its Terms).
3. Property Information and Purpose of Loan is the 2nd Section. If you accepted a new home deal, in the ‘Property Information’ area you need to enter the property address. If you do not have this information, you can leave it blank. Next, you need to enter ‘Purpose of Loan’ which can be: purchase or refinance. You also need to enter information about the type of property which can be primary, secondary, or investment and the names on which you want to apply for loan and also the source of your down payment
4. The 3rd section is all about Borrower Information which involves providing personal details such as the applicant’s name, SSN, contact details, age, and marital status, the number of children you have and their ages and your present and past employment details.
5. The 4th Section is about filling Employment Information where you need to provide your current and previous employment information.
6. The 5th Section, Monthly Income and Combined Housing Expense Information can be filled by going through your pay stubs.
7. The 6th Section, Assets and Liabilities can be filled by going through your bank statements, credit card statements, and asset information.
8. The 7th Section, Details of Transaction can be left blank and you can talk about seek assistance from the money lender to assist you with it.
9. The 8th Section is the Declarations sections, where you will find questions on declarations. After answering them, you need to put a signature and date.
10. The 9th Section, Acknowledgment and Agreement will be found at the bottom of the form. Again you need to put a signature and date.
While filing the form, if you come across any section that does not pertain to you or you are not able to answer them, you can skip it and answer them in the presence of the money lender. Filling a mortgage application is not a tough job; however you need to make sure you have all the required details to make sure your loan application is submitted quickly.
By On March 5, 2010
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If one wants to find the best mortgage rates, one first needs to ensure that one is in a position to get a mortgage in the first place. There is no point seeking out information when one is seen as a high risk and consequently is likely to have one’s application denied.
One’s credit score is a big factor in determining the rates that one will have to pay. It is often very difficult for a person with bad credit to even obtain a mortgage. Low credit can be gained through a number of methods, not the least of which is having outstanding debts. There are companies which will provide a list of all the organizations to which one still owes money. It is a good idea to pay off all debts before attempting to apply for a mortgage. Remember, the amount of money that one has coming in every month will be directly related to one’s ability to pay off the mortgage. If one has other debts, one might not be able to make payments.
There is a common misconception that the lowest quotation received will be the best mortgage rate. This is not always so. It depends on what is included in the value given. Many people forget to factor in things like late payment fees, interest rates and hidden charges. These can really add up to a lot. It is important therefore to get a break down of everything that s included. It is the only way that one can make a valid comparison. Don’t go with what one thinks is the first good deal that one comes across. As with anything else, shop around. Speak to a number of people and hear what they have to say before making any decisions.
Don’t forget to haggle. This doesn’t have to be a loud process with each person completing to outdo the other. Haggling of this nature simply involves listening to what the mortgage company is willing to do, informing them that one has been offered better rates elsewhere, and hoping that they’re willing to put something on the table so that they can get one’s business. Of course this can backfire. A large number of people are going to try this and the mortgage company will be used to hearing it. It would help if one could actually show some proof of a lower quote. This might encourage them to put together a better package even if they cannot lower their rates accordingly.
By On February 15, 2010
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Bankruptcy is one subject everyone wants to avoid because it brings about a bitter taste and shows ours pitiable, embarrassing financial state. This is also a topic that always opens a can of worms, or questions that are left unanswered, no matter how much you study the subject. Consumers who have filed for bankruptcy protection are eligible to begin applying for a FHA backed home loan in as short as 12 months for Chapter 13 and two years for Chapter 7. Most lenders will closely disect your credit report if you have previously filed for a bankruptcy, especially if you have late payments after the discharge. In addition, lenders will require you have demonstrated an ability to effectively rebuild your credit.
To better understand what bankruptcy is, we have provided you with an overview of the differences between Chapter 7 & 13.
Let us find out all we can possibly do about personal bankruptcy, how to decide whether we should file one or not, and also determine which chapter bankruptcy is good for us
When it becomes difficult to manage our debt, we have to file for bankruptcy, a legal and common way to get out of the debt trap. There are two common types of legal protection for bankruptcy, Chapter 7 and Chapter 13 that are available for an individual (non-business entity):
Chapter 7 bankruptcy
Chapter 7 bankruptcy is known as ‘liquidation plan’, because the non-exempt assets of a debtor are liquidated by the trustee to pay off creditors. Non-exempt assets are assets apart from your primary home and primary vehicle. In other words, real estate (a second home or so), cars (not your primary one), investments etc are non-exempt assets. Chapter 7 bankruptcy is used to pay of unsecured debts like credit cards, personal loans etc. Once you file bankruptcy under Chapter 7, the creditors are supposed to stop foreclosure, calling you for collections, or terminating services etc; for a temporary period given by the court of law. This temporary period is also called ‘automatic stay’. If the creditors are not paid or an agreement is not reached within this ‘automatic period’ they can resume action against you
How can I be eligible to file for bankruptcy under Chapter 7?
The biggest eligibility to file for bankruptcy under Chapter 7 is the income of the debtor. You have to take a ‘means test’ by the state where your gross monthly income over a period of 5 years is taken. If the monthly income turns out to be twenty five percent of your unsecured debt, the individual does not become eligible. Also a potential chapter 7 bankruptcy applicant must prove that she or he has taken counseling from an approved agency in the last three months. Chapter 7 bankruptcy filing is speedier compared to other types of bankruptcy protection.
Chapter 13 bankruptcy protection.
Chapter 13 bankruptcy protection, also known as ‘wage earners protection’ helps debtors with a regular source of income to work out a payment plan with the lender or the creditor. In other words, you can relate Chapter 13 bankruptcy protection akin to debt restructuring. Though Chapter 7 bankruptcy is a pure case of liquidating your non-exempt assets, in Chapter 13, you are given an opportunity to restructure your debts and the chances of your assets and non-exempt assets being liquidated are very less. A Chapter 13 payment plan does not stretch beyond five years in duration. In Chapter 13 bankruptcy protection, the payment turns out to be easier because the debtor has to make one monthly payment to the trustee and the trustee will pay the suitable amount to each creditor.
How do I become eligible to file under chapter 13 bankruptcy?
Any individual is qualified for Chapter 13 bankruptcy protection as long as that individual’s unsecured debts are no more than $336,900 and secured debts are no more than $1,010,650.00. Apart from this, a potential chapter 13 bankruptcy applicant must prove that he or she has received credit counseling from an official agency in the past 180 days.
Though as debtors, we can prepare the paperwork and file for bankruptcy, it is better to take the help of a bankruptcy lawyer to help you through the process. Every state has compulsory fees to be paid for bankruptcy filing. If the debtor is not able to pay, there are other provisions made. Apart from filing fees, you have to pay fees to the attorney as well.
You should know that filing for bankruptcy can be a huge dent on your credit history because it can leave a negative marking on your credit report for years to come. This is the reason why people choose it as a last report, and look for alternatives like debt settlement, debt consolidation and credit counseling. So make sure that you are through and clear in your decision about filing for bankruptcy. If needed, take the advice of a lawyer, credit counselor or a financial expert before doing so. To avoid bringing ourselves to this state, it is better to make timely payments and reduce taking too much credit.
By On February 4, 2010
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Reverse mortgage is a special kind of loan that is given to aged home owners; without any obligation to pay back the mortgage. The repayment is done only when the borrowers sell the property, die or move into a retirement community. Since reverse mortgage has high demand, there are a lot of banks and institutions offering reverse mortgage. But how do you know which one should you go for? It has become very evident in the past few years that people who sell this form of mortgage often resort to cheap gimmicks and hype to sell them. Also there are many senior citizens who have a hard time grappling with the concept of these loans So here are some ways, you can make a wise decision with regards to reverse mortgage
1. Types of Reverse Mortgage Loans: These loans are divided into three parts or categories as follows:
• The first category is called the single purpose reverse mortgage, which is granted by a few state governments and nonprofit organizations. These loans are usually the cheapest of them. You can use these loans for certain purposes like home improvement, travel, health expenses etc
• Home Equity Conversion Mortgages: These types of mortgages are backed by the US Department of Housing and Urban Development (HUD). You must get in touch with a counselor from an independent government authorized housing agency to get sanction for this loan. These types of reverse mortgage are expensive especially if you are planning on staying in the house for a short period of time. The good thing is that these loans are widely available and there is no need to submit income or medical proof
• Proprietary Reverse Mortgage: These are like private loans that are backed by the companies that draft them. These loans are tax free usually.
How much loan can I get from reverse mortgage?
The reverse mortgage amount depends on the appraised value of your home, the interest rate and your age. The older you are, the lower is the interest rate and more valuable does your home become
What are the costs associated with reverse mortgage?
Lenders charge mortgage insurance premiums, servicing fees and origination fees. The fees are to be paid when the home is sold. As a borrower, you have to pay the utility bills, maintenance, insurance, taxes and other expenses. In case, you fail to pay these and you do not keep the home in a good condition, the reverse loan may become payable. It is also the borrower’s prerogative to keep the interest rate fixed or variable. When you pay the loan, you can subtract the interest in the taxation.
What happens in case I fail to pay?
In case, you are not able to pay due to a genuine reason, you can thank your stars. These loans come with the compulsory mortgage insurance. Due to this insurance, it is decided that if the borrower is not able to cover the total sum of costs, when he sells the home, the insurance will tender the difference. In other words, you do not owe more than the value of your home. The lender will get his money definitely. Mortgage insurance guarantees that the seller is paid in full without any tension to the borrower.
By On January 17, 2010
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If you master the act of managing your finances well, you will be able to attain financial freedom and fulfill all your goals and dreams. Financial independence is not only being able to pay your monthly bills on time but also have the ability to secure your future. Here are some points you need to keep in mind in order to achieve financial independence:
1. Stop thinking like a typical employee.
Do not restrict your earning potential to your 9 to 5 job and slog yourself to get promotion because you feel it is the only way you can make more money. Keep in mind that financial freedom is not about having more power or big salary, it is all about being free from the worries of finances and having passive income. Your aim should not be to become a manager or a boss but to become the owner.
2. Passive Income
Passive income is a way through which you can make consistent money on monthly basis by investing your money into assets. You can do so by investing in properties, earning interests from the money that you have in your bank accounts, earning profits from your business by the work done by others etc
3. Financial freedom is not for old age.
Most people have the mentality that they should work for 35-40 years and earn money until they reach the age of retirement. Whatever they manage to save is used to fulfill their dreams. By the time you become 65, your health status may not allow you live your dreams even though you have sacrificed for it all your life. Whenever you are making, you should make efforts to take risks and achieve financial independence much before the age of 65.
4. Find out what is stop you from achieving financial freedom
There can be plenty of reasons such as fear from taking risks and mediocrity as to why people struggle miserably or fail to fulfill their dreams in life. We should realize that negative mentality is stopping us from achieving financial freedom and act towards removing the obstacles that come in the way.
5. If you are rich, you are not financially independent.
If your definition for true wealth is having a huge amount of money in the bank and having a house and a car then you are mistaken. This is true if your expenditure exceeds your income. True wealth is living a life without any financial worries, having numerous assets and employees working for you, a continuous passive income every month, having lots of time to enjoy life and help others to achieve the same. Your goal should be to become financially independent but not to become rich.
6. Put the Law of Success Into Practice
Time and time again we heard different laws of success, we should put into practice to achieve financial freedom. Having a firm desire to become financially independent, believing that it is possible against all the odds, having the faith to achieve it, keeping a positive mindset and never say quit attitude, removing fears and doubts and making all the efforts to accomplish your goal are the secrets to success.
By On November 27, 2009
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The FHA loan market has changed dramatically over the past 12 months as consumers have increasingly shifted their desire to obtain financing that is HUD approved through lenders offering FHA mortgages. The major shift by consumers has been heavily influenced by changes in the secondary marketplace and heightened credit policies by Fannie Mae and Freddie Mac.
The role of FHA has expanded and HUD has indicated they will be forced to make changes to the program in 2010. The real estate market has shown some new signs of life, thanks in part to government tax rebates and subsidies by the Fed to keep rates low. The existing home sale market has shown improved figures for five of the last six months, bringing with it a belief that a pricing floor may finally arrive next year. New home sales have improved, not at the same level as existing home sales, but are still considerably higher than in the first six months of the year, providing a ray of optimism for the building industry.
HUD has been under pressure from the declining real estate industry as foreclosures have skyrocketed in their inventory. The percentage of delinquent FHA mortgages has doubled this year with little optimism that this trend may reverse anytime soon. FHA mortgages are an area that has been more susceptible to delinquencies, because the existing loan pool contains a large percentage of first time buyers and credit borrowers with less documented payments histories.
The Government has shown a clear desire to try and help the housing markets stabilize, with a number of programs; Making Home Affordable, Rate Subsidies, Tax Rebates. Therefore, the speculation that FHA would need to further tighten underwriting guidelines seems to be a move in the wrong direction. FHA loans serve a critical role in helping first time buyers and borrowers with low down payments qualify for homes. Tightening these guidelines would work against stabilizing prices as it removes a large percentage of potential buyers from the marketplace. The government would be better served by recapitalizing FHA and offering more opportunities to new home buyers, a move that would benefit the entire sales market.
By On October 8, 2009
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The clock that is ticking across the country is helping drive the real estate market into a strong fourth quarter finish. First time home buyers have less than sixty days to find, negotiate and finalize purchasing their first homes or pass on an opportunity to receive up to $8,000 in tax credits from the government. The government’s incentive to help bring more first time home buyers into the real estate market and help stabilize home prices will be ending at the end of November.
This historic opportunity has helped in lifting home sales across the nation in five of the past six months, and provided new home owners with financial incentives to help bring them one step closer to the dream of homeownership. The success of this program is also made in large part possible by the department of HUD and FHA mortgage financing. The state of today’s mortgage market allows for few options for first time buyers to secure financing for their home purchases. FHA mortgage loans help to fill a critical void in the industry as they can offer buyers the opportunity to finance with as little as three percent for a down payment. FHA loans have gained market share at record pace over the last two years, and first time buyers make up the largest percentage of FHA loans that are being underwritten in the marketplace. FHA loans are a bit more lenient with borrowers credit histories and can help buyers finance who do not have traditional credit scores.
The only drawback with financing with a FHA mortgage is that these loans tend to take longer to underwrite. The additional time necessary for underwriting could become a huge factor for buyers trying to squeeze in and close on a purchase prior to the end of November deadline for the government tax credit. There are likely to be hundreds of thousands of new purchase contracts being written over the next three weeks, all with the expectation of closing before the tax deadline passes. If you are one of those buyers who is working to finalize a purchase agreement, it would be prudent to line up your pre approval through your FHA approved lender as soon as possible and try to provide the lender with all of their required underwriting documentation, to help speed up the process and remove the potential that you could miss the deadline. There are certain to be miscues along the way, so avoid waiting until the last possible moment to help protect yourself, the lender and the home seller and ensure a smooth closing with great assistance from the government.