Archive for January, 2008

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When Applying For a Mortgage, How Much Can I Borrow?

Posted by David
January 27, 2008
The real estate market is full of bargains these days. Homes that sold for $500,000 a year or so ago can probably be picked up for less today because the housing market has become soft or has turned into what is known as a buyer’s market.
So, when you’re out there looking for a home, the big question is, “for my mortgage, how much can I borrow?” While the answer may be delightfully surprising, the real test comes when you figure out how much you can truly afford. Therefore, in this article we will give you the information you need to determine how large of a mortgage you can make the payments on and then you can go look for your dream house.
How much you borrow is up to you
The way the real estate mortgage market works today is anybody with decent credit can get a mortgage for just about any amount he asks for. It’s really gotten crazy! Through negative amortization mortgages people have gotten mortgages for way more than they could afford and they were actually talked into this overextending of themselves by the lenders.
This is what you want to avoid. The lenders make more money for each additional dollar they lend you. Realtors have absolutely no motive to try to make sure you can make your mortgage payments because they get their percentage at closing. After that it’s up to you. Personally, I believe the buyer having this information will make much better choices than a lender or a realtor would make.
The 28/36% rule
Back in the 1980’s, they used to determine how large a mortgage a potential homebuyer could afford by using the 28/36% rule. Using this rule, the lender would first find out if the applicant had any debt before the purchase of the property. This debt would include car payments and credit card payments.
If the applicant had none, the lender would multiply the applicant’s total monthly income by 36%. The monthly income would be the yearly income divided by 12. Though this might seem like an oversimplification, it is calculated that way instead of using 4 weekly paychecks as a month or 2 biweekly paychecks as a month because this amount would be smaller than the true monthly pay received.
So, if someone made $6,000 a month, it would be multiplied by .36, which would give an answer of $2,160 per month. This would be the amount of the monthly payment the applicant would be allowed to borrow up to. They would use this amount without adding on taxes or homeowner’s insurance.
$2,160 a month would pay for a mortgage of $324,000, if the mortgage interest rate was 7% and the term of the mortgage was 30 years. The standard in the lending business is the mortgage can be up to 80% of the price of the property, so the price of the property could be as high as $405,000. Of course, the buyer would need an $81,000 down payment.
What about that car payment?
If the applicant had other monthly obligations, such as a car payment, the lender would use 28% of the monthly income. In this case, the applicant could make monthly payments of up to $1,680. If again, the rate was 7% and the term was 30 years, $252,000 could be borrowed.
I am a proponent of the 28/36% rule. It is more liberal than the old standard from the 50’s, which was not to take on any larger monthly obligations than the amount of your weekly paycheck, but the 28/36% rule does give a proven guideline.
There is one last word of caution. Make sure to only apply for a fixed rate mortgage. These days, lenders will qualify people at some low introductory rate and then a year down the road the minimum monthly payment rises to well above the amount the applicant was approved for.
Don’t go there! Get a fixed rate mortgage only and there will be no future life ruining surprises.
The author, Ed Lathrop has developed EzCalculator, a Mortgage Calculator with a “pay off credit card debt” calculator, a free “student loan” calculator and the famous “How to Make $100,000 on Your Mortgage” calculator. Come visit this free site at Free Financial Calculator Also, print out a free amortization schedule of any mortgage at Free Amortization Schedule
By Edward Lathrop

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Be Aware Of The Hazards When You Apply For Mortgage Online

Posted by David
January 27, 2008
With the availability of the Internet it is very easy for a would be borrower to apply for a mortgage online in hopes of getting the best deal available. However what most people do not know is that there are many negatives involved with online loan applications that you need to be aware of as a consumer.
Apply Once Get 100 Calls: The truth of the matter is that a large percentage of mortgage application websites on the Internet today are not really mortgage lenders. Instead they are mortgage lead companies that will sell your contact information to mortgage companies that pay them for this information. To make matters worse lead companies often sell to each other making what was one application turn into months of annoying phone calls.
Remote Lenders: If you do apply for a mortgage online and receive a rate quote that makes you happy you will still be dealing with a company that could located on the other side of the country. This may not bother some borrowers but a local mortgage company almost always gives better more personable service to local borrowers and reduces the possibility of identity theft.
Information Security: By entering your social security number and other sensitive information when you apply for a mortgage online you are taking a risk that could wind up costing you alot more then you bargained for. Even with all the security measures in place and a secured website, hackers can and do gain access to companies databases and steal valuable information. You also really have no clue where your information is going after you hit the send button, is it going to a real mortgage company or a site set up to steal information?
While some people have had a great mortgage experience from online lenders many do not. The only guaranteed way to make sure that you mortgage company is going to keep your information private and confidential is to choose a local lender and walk into their office and talk face to face with your loan officer. That can only be done with a local lender and is not possible you apply for a mortgage online.
Get valuable refinance information from a Wisconsin Mortgage Broker who has compiled a HUGE consumer Mortgage Refinance information library for you to educate and inform yourself with.
By Darin Sewell

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My Equity Is Practically Gone - Can I Still Refinance My Way Out of This Adjustable Mortgage?

Posted by David
January 27, 2008
Most recently, the devaluation of homeowner equity has played an extremely negative role in our current mortgage climate, and has adversely affected thousands, perhaps millions, of homeowners throughout our country. This is especially true for those who have purchased their home in the past 2 years, during this time of accelerated declining market value.
For the borrower who commonly bought their house by putting down 10% of the purchase price, and took out a 1st and 2nd mortgage, has seen his equity all but disappear. This has made it virtually impossible for the homeowner to improve his condition by refinancing because lenders have all but eliminated 100% financing. Even 95% financing is very difficult to obtain.
Furthermore, if a prepayment penalty has been added to the loan any possibility of refinancing is virtually eliminated.
Such a situation of declining equity value does not create a problem for someone who originally took out a 30 year fixed 1st mortgage because their interest rate will stay constant throughout the life of the loan, but for those who took out a 2 or 3 year adjustable mortgages and find their mortgage payments have increased substantially, this can be dangerously problematic.
In fact I believe it is the primary reason for all of the foreclosures now occurring in this country; a declining market that has eliminated any equity in the home, combined with a mortgage payment that has increased to a level that is impossible for a borrower to comfortably pay.
Without any value in their home and burdened with a high mortgage payment, home owners are simply walking away in droves.
If you are caught in this unfortunate situation of a rising mortgage payment and very little equity, you too might be considering walking away. If, however, you have managed to retain 5% of your equity and your income, assets and credit score are all in good standing there is still an opportunity for you to refinance your way out of your dilemma.
I would be happy to assist you by providing a FREE analysis of your loan situation. Simply log onto my website, put in your information, and I will contact you soon afterwards. Good luck in this turbulent marketplace. I sincerely hope that you will be able to hang onto your home until the dust settles and values being to increase again.
My name is Allen Sayble and I have been a loan officer since 2001. I specialize in hard to find loans for borrowers with less than stellar credit and income situations, but also work with refinances and purchases for borrowers in good standing. I am based out of Ashland, Oregon and can write loans in Oregon and California. At this time in the mortgage business it is most important for each borrower to work with a professional loan officer.
It’s also best to work with a broker, like myself, who has access to all of the different lenders so as to not be restricted to one lending institution or bank. Please visit my website http://www.mortgageconsumer.com to learn valuable information about the loan business so that you can be well informed about the loan process and make the most educated decision with regards to your home loan.
You can also contact me at 541-324-9623.
By Allen Sayble

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Bad Credit Score: Effective Ways to Repair It

Posted by J S
January 26, 2008

Having a good credit score rating means everything in today’s world. It is something that you should have in order to live life comfortable and as easily as possible. This is why many people work hard in order to have good credit rating score and prevent them from plunging in to a bad credit rating score.

You now ask what kind of things that you can benefit from by having a good credit score. First of all, a good credit score can increase your chances of getting the loan you apply for and secondly, it will help you get certain jobs and programs that will require good credit score. These are the two main reasons why you need good credit score.

However, if you are plagued with bad credit score in the past, you now ask how you can get good credit score again or how you can repair your credit score. It is important to realize the fact that if you have a bad credit score, you will need to repair it as soon as possible before your credit score becomes much worse.

Repairing bad credit score will require you to have patience and also a little luck. It is something that you should do in order for you to live life comfortably and also a little easier for you and your family. By repairing your bad credit score as soon as possible, you will never miss out on any more great opportunities that will cross your path in the future.

Before you go on and start repairing your bad credit score, you first need to understand what credit is all about. You have to know how it can affect you life. For example, if you are in need of a loan, lenders will take a look at your credit rating to determine if you can be approved for the loan. A good credit rating will ensure the lenders that you pay your loans on or before the deadline and thus, will ensure them that you will be able to pay the loan you will apply for. The same applies when you are applying for a credit card.

Now that you know what it means to have a good credit rating, the next thing you need to do is to determine if you have a good credit rating or not. Surprisingly, not many people know if they have a good credit rating or if they have a bad credit rating. To know about your credit score, you can simply ask for it in several credit reporting agencies. They will be able to provide you with a numerical indicator of how much your credit rating rates and how much credit risk you are.

If the indicator says that you have a high score, this means that you have a good credit score, if you have a lower score, then it will indicate that you have a bad credit score and will be far more risky to get approved of for loans.

So, if you have a bad credit rating, the first thing you need to do to improve your credit rating is to take care of old debts. By paying all your old debts, this will stop the creditors to stop making negative reports to credit reporting agencies.

This is the first thing you have to do in order to stop your credit score from getting much worse than it already is. By cutting the source of negative credit reports, you will be well on your way to get a good credit score.

However, paying all your debts doesn’t necessarily mean that you will instantly get good credit rating. You have to remember that this will just stop it from getting any more worse. Your old bad credit score will still be there. So, obviously the next step would be to start looking for ways to make some positive reports on your credit rating.

You can do this by applying for a credit card that is designed for people who have bad credit rating, such as a secured credit card. You should also start opening a new savings account or checking account. Always remember that you should pay your balance on time in order for you to establish a positive credit report.

Eventually, your old bad credit score will expire in time. Always keep paying your debts on time and your credit history will look better than in the past. However, it will usually take around 5 to 7 years for your old credit report with negative reports to expire. This is why patience is very important.

With patience, you will see that in time, your credit score will rise and get rid of those negative reports that you had in the past. Always remember to keep paying your debts on time in order to continue have a good credit score.

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Bad Credit Score: Effective Ways to Repair It

Posted by J S
January 26, 2008

Having a good credit score rating means everything in today’s world. It is something that you should have in order to live life comfortable and as easily as possible. This is why many people work hard in order to have good credit rating score and prevent them from plunging in to a bad credit rating score.

You now ask what kind of things that you can benefit from by having a good credit score. First of all, a good credit score can increase your chances of getting the loan you apply for and secondly, it will help you get certain jobs and programs that will require good credit score. These are the two main reasons why you need good credit score.

However, if you are plagued with bad credit score in the past, you now ask how you can get good credit score again or how you can repair your credit score. It is important to realize the fact that if you have a bad credit score, you will need to repair it as soon as possible before your credit score becomes much worse.

Repairing bad credit score will require you to have patience and also a little luck. It is something that you should do in order for you to live life comfortably and also a little easier for you and your family. By repairing your bad credit score as soon as possible, you will never miss out on any more great opportunities that will cross your path in the future.

Before you go on and start repairing your bad credit score, you first need to understand what credit is all about. You have to know how it can affect you life. For example, if you are in need of a loan, lenders will take a look at your credit rating to determine if you can be approved for the loan. A good credit rating will ensure the lenders that you pay your loans on or before the deadline and thus, will ensure them that you will be able to pay the loan you will apply for. The same applies when you are applying for a credit card.

Now that you know what it means to have a good credit rating, the next thing you need to do is to determine if you have a good credit rating or not. Surprisingly, not many people know if they have a good credit rating or if they have a bad credit rating. To know about your credit score, you can simply ask for it in several credit reporting agencies. They will be able to provide you with a numerical indicator of how much your credit rating rates and how much credit risk you are.

If the indicator says that you have a high score, this means that you have a good credit score, if you have a lower score, then it will indicate that you have a bad credit score and will be far more risky to get approved of for loans.

So, if you have a bad credit rating, the first thing you need to do to improve your credit rating is to take care of old debts. By paying all your old debts, this will stop the creditors to stop making negative reports to credit reporting agencies.

This is the first thing you have to do in order to stop your credit score from getting much worse than it already is. By cutting the source of negative credit reports, you will be well on your way to get a good credit score.

However, paying all your debts doesn’t necessarily mean that you will instantly get good credit rating. You have to remember that this will just stop it from getting any more worse. Your old bad credit score will still be there. So, obviously the next step would be to start looking for ways to make some positive reports on your credit rating.

You can do this by applying for a credit card that is designed for people who have bad credit rating, such as a secured credit card. You should also start opening a new savings account or checking account. Always remember that you should pay your balance on time in order for you to establish a positive credit report.

Eventually, your old bad credit score will expire in time. Always keep paying your debts on time and your credit history will look better than in the past. However, it will usually take around 5 to 7 years for your old credit report with negative reports to expire. This is why patience is very important.

With patience, you will see that in time, your credit score will rise and get rid of those negative reports that you had in the past. Always remember to keep paying your debts on time in order to continue have a good credit score.

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Getting the Bait on Good Home Loan Terms Despite Bad Credit Score

Posted by J S
January 25, 2008

Getting a home loan is just like getting recognition at the end of each academic year in school. Before you are awarded of any recognition, you must comply with the requirements for such recognition. For instance, before you will be given an academic award, you must first satisfy the required general weighted average on each or all subjects. Other awards also follows particular criteria before it would be awarded to deserving students at the end of the school year.

The same thing also goes in securing a home loan. There are certain requirements that you must meet before you will be able to secure a home loan. One of which is that you must possess a good credit rating.

However, despite the wide availability of home loans, there are still thousands of individuals who failed to secure home loans merely because they possess a bad credit score. They are not fully aware that any delinquency in paying their outstanding loans caused the “stain” in their credit record, thus they would be having a hard time securing a good home loan.

In other words, possessing a bad credit score simply means you are giving the lender reason to get more money from you through giving you home loans with high interest payments. You want to secure a home loan because you do not have enough money to finance the purchase of your new home, and yet you will be given a financial burden if you insist on getting a home loan despite of your bad credit score. That would be a terrible situation for your part.

Fortunately, there are still loan options for you despite your possession of a bad credit score. There are commercial lenders who offer bad credit home loan for individuals who are having a hard time securing a loan to finance the purchase of their new home. However, bear in mind that because of your bad credit standing, you will automatically become a “great risk” to the lender. Thus, expect that they will charge you higher interest rate as an assurance that you will be able to repay your home loans in the agreed period of time.

Bad credit score will really put you in a situation wherein it is you who is on the bottom of the wheel. Thus, you need to strongly convince your preferred lender that you are still worthy of another chance and not be a risk to them. How to do it? Have a look on the following guidelines and make sure that you will follow them.

- Research for the best available bad credit home loan offer in the market. You may prefer visiting various commercial lenders and financial institutions in your local area to know their terms and conditions as well as their rate of interest for home loans with bad credit score. In addition, a personal contact inside these financial institutions could be of great help in your credit problem.

- Cleanse your credit rating while there is still time for you to do so. If there are incorrect entries posted in your account, it is best that you call the attention of the authority with regards to this matter and have them clear your record of any incorrect rating. You may also ask for some certification from your previous lenders clearing you of any financial obligations. In this way, the recovery of your credit rating will be in place before you can secure another loan.

Getting a home loan with bad credit score could really be a daunting task. But if you manage to clear your rating in the shortest time possible, you will be able to secure a home loan that will not be a financial burden to your part later on.

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