July
24
2010
Sub-Prime Mortgage Loans Who Qualifies For A Sub-Prime Loan?
Sub-prime mortgage loans are designed for those who dont qualify for A rated loans, typically those with a FICO score of less than 650. They also cater to those desiring unconventional terms, like a jumbo loan. As with any lender, to find the best financing, you have to compare mortgage loan offers.
Who Qualifies For Sub-Prime Loans?
Anyone can qualify for a sub-prime loan, no matter their credit history. Even people with excellent credit may choose to work with a sub-prime lender to work out special terms.
When it comes to mortgage loans, sub-prime lenders dont decline applications. Rather, they present terms, which you can choose to accept or decline.
For instance, a person could discharged a bankruptcy and apply for a mortgage the next day with a sub-prime lender. The lender would likely charge 12% above conventional rates and require a 50% down payment. The option is to either take the loan or wait two years for much better terms.
What Sub-Prime Lenders Offer?
Besides flexibility with terms, sub-prime lenders offer near conventional rates. On average, sub-prime lenders charge 1% to 2% above conventional rates for every drop in credit grade. However, large cash reserves or down payments can offset a negative credit history.
Sub prime lenders dont require private mortgage insurance a real savings if you dont plan on a down payment of 20% or more. Lenders also offer refinancing options in your mortgage, saving on closing costs in the future.
Who Provides Sub-Prime Loans?
It used to be that only unconventional financing lenders offered mortgages to those with poor credit. But now virtually all banks and financing companies deal with sub-prime loans. For the lowest credit ranks, you still need to work with a sub-prime lender.
To find the right sub-prime loan, compare financing offers from several companies. You can work with a mortgage broker online to evaluate quotes in minutes or go directly to lender sites.
When requesting a loan estimate, provide as much information as possible, including your credit score. But dont let the potential lender inspect your credit report unless you want to see your credit score go down. Only allow the most promising lead access your report to complete the loan application.
July
17
2010
Imagine landing your dream home. Your credit is a bit shaky, but you manage to get a subprime loan with an adjustable rate mortgage. A few years later the interest rates jump and you can no longer afford to pay. You see an ad for a business thats willing to helpitll pay your mortgage for a modest monthly fee while you get back on your feet. But heres the heartbreak: its a scam. The con artists just take your money and run
Its just one of the latest schemes and frauds being seen these days across the financial services industry.
These scamswhich include plenty of shenanigans with mortgages and subprime loansare costing the nation tens of billions of pounds a year.
Millions of homeowners are caught up in this subprime mess. The Federal Reserve has gotten involved in an attempt to bail out the mortgage loan companies. Criminal charges may be filed against these companies for falsifying records, loaning money to under-qualified home buyers, and not reporting the truth to investors.
These are all good reasons why the US government is squarely focused on cracking down on the largest of these financial crimes, launching proactive initiatives and shifting resources as trends emerge, all the while working hand-in-hand with a host of government and private sector partners.
Currently, investigators are actively pursuing mortgage companies and investment irregularities.
The government is investigating 14 corporations involved in subprime lending as part of our Subprime Mortgage Industry Fraud Initiative launched last year.
The companies come from across the financial services industry, from mortgage lenders to investment banks that bundle loans into securities sold to investors. Theyre also looking at insider trading by some executives.
Traditional mortgage fraud:
In one state alone, more than 1,200 cases open today (up about 40 percent from last year), mostly involving fraud for profit, where groups of straw buyers, realtors, etc. rig schemes to buy properties that are flipped or allowed to go into foreclosure.
Hotspots include California, Texas, Arizona, Florida, Ohio, Michigan, and Utah.
Suspicious activity reports that we review for potential mortgage fraud have grown from 3,000 in fiscal year 2003 to 48,000 in fiscal year 2007. This year, theyre on pace to receive more than 60,000 such reports.
A recent case: In November, the owners of a long-time Minnesota homebuilder called Parish Marketingalong with a bank officer, a closing agent, and otherspled guilty to a 100 million mortgage scheme involving some 200 homes.
If you are a victim of the subprime mortgage madness, contact your bank and see if there are any programs in place to alleviate the pain.
July
10
2010
Subprime Mortgage Lenders – Sub-Prime Loans Now Available Through Traditional Lenders
Sub-prime loans are becoming more readily available through traditional lenders. Even with a bankruptcy or foreclose in your credit history, you can still find financing for the purchase of your home. The key to sub-prime mortgages is to do your research and compare both terms and rates.
Your Credit History
A poor credit history doesnt have to send you running to sub-prime lenders. For one, you may still qualify for an A loan, reserved for people with good credit. If your bankruptcy was four or more years ago and you have established a good payment history since then, your FICO score is probably over 600, the requirement for an A loan.
Through FHA loan programs, you can apply for a loan after two years of a bankruptcy or foreclosure. VA loans also look more leniently on past credit problems. In the end, dont assume that because you have an adverse credit history you have to apply for the higher interest sub-prime loans.
Sub-prime Mortgages
If you find that you do have bad credit, you can still work with a traditional lender, who may offer you better interest rates. As financing companies expand their financing options, more and more companies are adding services for B, C, and D loans.
Sub-prime mortgages are based partly on your credit history, but largely on your mortgage or rent payment history. You will want to provide proof of your rent payments by sending copies of your rent receipts or checks. Mortgage payments can be verified through your credit report.
Sub-prime mortgages are just short term financing options. Once you have improved your credit history, you can refinance your mortgage for better rates.
Sub-prime Lenders
When you start your search for a sub-prime lender, include all lenders in your investigation. Request quotes from traditional lenders as well as those who specialize in poor credit financing. Compare everyones financing packages to find the best rates and terms.
Ideally, you want to find a low APR with no prepayment fees. Unless you plan to keep your mortgage for seven or more years, it is probably not worth paying points for lower rates. You may also find that an ARM will provide lower rates with more buying power than a fixed rate mortgage.
July
3
2010
Subprime lenders finance high risk groups to enable them to buy a home. While you need to be aware of predatory lending practice, by researching lenders you can find a mortgage loan at a reasonable rate.
Bad Credit Factors
Before you sign up with a subprime lender, be sure that you truly have bad credit. There are five factors that determine your credit score: payment history, credit history, amount owed, types of credit, and new credit. Each of these factors are weighted differently, so a series of late payments on one account may be offset by low debt, no new credit inquires, and other factors.
A FICO score less than 570 will require you to use a subprime lender. However, you may be able to still use a traditional mortgage lender by providing a large down payment, qualifying you for lower interest rates.
Subprime Financing Versus Predatory Lenders
Subprime lenders offer genuine financing so you can purchase your home and repay your loan. Predatory lenders seek to strip your home equity, charge excessive interest rate, and foreclose on your home.
Predatory lenders will often list their site on public forums in an effort to lure unsuspecting victims. They will also make claims that they are the only ones who will lend to you or that they can fix all your credit problems. Also, beware of lenders that insist you work with a particular contractor or real estate agent.
Finding A Good Subprime Lender
To find a good subprime lender, use an online mortgage broker who will give you quotes from several different lenders. Compare rates and fees to see which are the most reasonable. Also ask lenders if they are approved by HUD. With poor credit, you may qualify for government mortgage insurance.
You should also determine what you can afford to pay monthly and not feel pressured to borrow more than that. If you are concerned about monthly payments, look at an adjustable rate mortgage (ARM), which offers low interest rates initially. An ARM is also easier to qualify for. However, a fixed rate mortgage offers long term predictability on how much your monthly payments will be.
June
26
2010
Stepping onto the property ladder and buying a home for the first time can seem like a really daunting prospect. You need to get the decision right because getting a mortgage is perhaps the biggest financial commitment you will ever make. Despite this, many people get a mortgage without really knowing a lot about the process. It pays to be clued up before stepping onto the property ladder. If you know about the mortgage buying process then you will get a better deal and find the right home for you.
The costs of a mortgage
Obviously the biggest cost of the mortgage is the lump sum that you want to borrow and the interest on top of this. However, there are many other charges that you need to think about when getting a mortgage. Arranging the mortgage will usually cost a few hundred pounds, as will legal fees. You also need to think about survey costs, land registry costs and stamp duty. There is also the amount of down payment you are going to make, all of which can add up to making the initial process of getting a mortgage expensive. Make sure that you have all of these funds in place before proceeding. You should be financially stable before even thinking about getting a mortgage.
Finding a lender
Once you have worked out the costs of getting a mortgage, you need to find the right lender for your needs. Shopping around to find the best deal is important, and looking at both online lenders and your local high street banks and mortgage providers is a good idea. You should look at lenders before you go house hunting, as you will have a better idea of how much you can afford to borrow and how much you will the lender will give you. That way you will have a budget to stick to when looking at properties. Some lenders will offer you a pre-approved amount, which can help to speed up the house buying process.
Finding a property
Once you have looked at lenders you should find a property that meets your needs and falls within your budget. Once you have done this you can get a survey done and exchange contracts.
Things to look out for
If you are new to mortgages, then there are a number of things you need to look out for. Most importantly, do not borrow more than you can afford. Although you may have seen the perfect house, that house will be taken away from you if you cannot meet the repayments. Do not be pressured into borrowing more than you can afford either. Remember that the lender can recover their money through repossession and know that lenders will get into other debts rather than default on their mortgage. Work out a strict budget and do not go over that amount. Also make sure that the mortgage terms you get are fair and that there are no hidden costs or services that you dont need, like credit insurance.
Know the terms
The last key to finding a good first mortgage is to know the terms involved in the mortgage process. If you know what to look out for and the things that you really need, then you can get a mortgage that will suit your needs and not cost you too much money. All you have to do now is find the right house for your budget.
June
19
2010
What is a stated income second mortgage? A stated income second mortgage is one that does not require the borrower to prove income stated on the application. This is most advantageous to self employed and contract workers who receive a 1099 instead of a W-2 as they would have a difficult time proving their income. Stated income mortgage loans are the most commonly used and usually the least expensive of the no documentation types of mortgages.
Mortgage lenders understand that it is difficult for individuals who are self-employed or operate a one-person firm to verify their income. Different types of no income loans are offered including state income or no income verification loans.
Inquiries should be made to a loan officer as to the types of reduced documentation information required to secure the loan. Lenders may require anywhere from 3 to 6 month reserve for principal interest taxes and insurance (p.i.t.i.). If the monthly p.i.t.i. payment is 2,000 a month; the lender may require proof of assets anywhere from 6,000 to 12,000.
A fixed rate second mortgage is a way to refinance higher adjustable rate second mortgages or home equity loans. If the interest rate on the second mortgage is below the adjustable rate, lower payments monthly would be a benefit of the second mortgage.
Home equity loans can serve a number of purposes. They can be used to reduce credit card debt, consolidate high interest credit lines, make home improvements and pursue educational endeavors.
Stated income lines are available to all borrowers but the lenders usually require the borrower to have a minimum credit score. The higher the credit score the better the interest rate offered.
A stated income second mortgage loan is suitable for borrowers who have no verifiable income and have assets to meet minimum reserve requirements of the lender. The stated income on your application must be reasonable in terms of your assets. Qualifications for no income verification loans require the borrower to have a minimum credit score. While it varies from lender to lender, most lenders will require the borrower to have a credit score above 580.
The lower the credit scores the higher the interest rate the lender will require. If your credit score is high you may be able to take advantage of a fixed rate second mortgage before the interest rates increase above 7%.
Consideration is usually given to the tax consequences of the different types of loans. A tax adviser should be consulted before a borrower commits to a mortgage whether he is a first time buyer or an experienced homeowner refinancing.
June
12
2010
Achieving perfect credit is a pipe dream to most consumers with negative credit and no money, or so it seems. Consumers think that theyll have to shell out an arm and a leg to render the services of a credit restoration company or a lawyer to dispute negative credit. And theyre right! I suppose thats where budget comes into play. If you have the budget, you could employ one of the many companies online which provide, for about 2,300.00, seasoned trade-line accounts. What this means, in a nut shell, is that they attach you (as an authorized user to as many as 5 different seasoned credit line accounts. This does not mean you have free reign to charge items to these accounts. In fact, by doing this they (the company) guarantee that your credit score will increase at least 180 points in 35 days. And in most cases it will, assuming youre dealing with a reputable company, of course.
What about the little guy with the moderate budgets? Where does she fit into all of this? There are many options for those consumers that are working with a moderate monthly budget. Instead of investing money, it is a good option to invest time to achieve perfect credit.
This means doing it yourself. Spend some time researching the possibility of repairing your credit yourself. All it takes is a little patience, time, and a little know how. You could invest 25-35 on a How To credit repair book from your local book store. The only problem with a traditional paper back book is the fact that, the credit law changes frequently. This will allow room for non-intentional error and indirect misinformation in your credit repair process. This could result in time wasted and more importantly money wasted.
Thats why I find E-Books to better suit the moderate budget consumers needs. E-Books are much cheaper, and frequently and easily updated. There is only a hand full of reliable Credit Repair E-Books on the internet today such as: Consumer Victory Credit and Credit Bible Secrets. It may not seem that way when you do a Google search for such keywords as: credit repair e-books or credit repair e-kits.
Out of all of the reputable E-Books you can purchase online, the publics Credit Repair E-Book of choice these days (according to sales and web traffic), is Consumer Victory Credits Credit Restoration E-Book. This particular E-Book is definitely becoming more and more popular on the web. This Do-It-Yourself Credit Repair E-Book was written by a seasoned Mortgage Banker, familiar with the ins and outs of the consumer credit industrys mind set. This in itself brings a lot to the table so to speak, which translates into a huge advantage for anyone who utilizes this information.
After reading this E-Book, it becomes clear that this author is highly knowledgeable in the consumer credit repair field (the consumer side and the creditorbureau side). The Author also points out what banks and creditors look for in a consumer, trying to obtain a loan or credit card. It evens reveals seasoned trade-line secrets, with out paying the 2,300.00, mentioned above.
It will only set you back less than 10, and it downloads instantly. If you want to check out this site to order this E-Book, click www.ConsumerVictoryCredit.com. I highly recommend it! Good luck in you credit restoration process.
June
5
2010
Shopping Home Equity Loan Rates
If you have been in your home for a number of years and you have established some equity, you may be considering liquidating some of that equity. A great way to do this would be to go with a Home Equity Loan.
A home equity loan allows for you to borrow off of the equity you have established in your home through appreciation and monthly mortgage payments without having to touch your first mortgage.
This is why a home equity loan can also be known as a second mortgage. But before you go and start signing applications, shop around so you can find the best home equity loan rate out there.
There are two types of home equity loans on the market that you have to choose from. The first one is your standard home equity loan with a fixed rate, which of course, is based on prime. This loan you receive in a lump sum and begin to make monthly payments upon it immediately.
The second type of loan is the home equity credit line. This one, as its name implies comes in the form of a line of credit. The home equity line of credit has a rate that is variable, which means it will fluctuate with the prime rate. Many of them come with introductory rates for the first five or six months.
Once approved for a home equity line of credit, you will not receive it in the form of a lump sum. Instead you will receive it in the form of a check book giving you easy access to draw upon it in the amount you would like at your convenience. Once you do draw upon it, you will have to begin paying it back on a monthly basis. Normally in the form of interest only for the first ten years.
Suppose you were to receive a home equity line of credit in the amount of 25,000.00. If you only wanted to borrow 6000.00, than all you would have to do is write out one of the checks the lender sent you and deposit it into your checking account. Your payment would than be based on the 6000.00 you borrowed from your line.
Keep in mind, home equity credit lines do come with a rate that is variable, and that rate is based on prime. So, if the prime rate goes up, the rate on your home equity credit line will go up as well.
On the other hand, if the prime rate goes down, than the rate on your home equity credit line will go down.
Mortgage companies are very competitive, so whichever home equity loan you decide to go with, it would be in your best interest to shop around so that you may compare rates.
After allowing for a few loan officers to assess your situation and offer you a rate and product, base your decision on the rate and product that best fits your needs and budget.
May
29
2010
If you are currently on the market for a new home, or you are looking to refinance your current mortgage, one of the most important things to you when shopping around for a home loan will be the mortgage interest rate.
Of course you will want your mortgage interest rate to be as low as possible, so take some time to shop around for the best deal.
Shopping around for the best mortgage interest rate is very important because you want to go with the best deal possible. Dont just settle for the first lender you come across and go with whatever rate they may offer you.
By shopping around you can compare rates and products. The difference in one percentage point on an interest rate can mean thousands of pounds in savings over the course of a thirty-year mortgage.
Think of shopping around for a mortgage the same as shopping around for a new car.
When you are on the market for a new car, you visit two or three car dealerships, you speak with a few different sales people, you test drive a few different cars, than make your decision on the best car at the best price.
Treat the concept of shopping for a mortgage the same as you would if you were shopping for a car.
The mortgage industry is a very competitive one, and the mortgage companies are all too happy to compete for your business. The last thing a mortgage company wants is for you to give your business to their competition.
When shopping around, let the mortgage brokers or loan officers you are dealing with know that you are shopping around. By supplying them with this knowledge, they will understand the importance of coming back at you with the best deal they have to offer to make sure they secure your business.
Once you have a handful of loan officers make you their best offer, give your consideration to the one with the best rate and to the scenario that sounds the most reasonable.
Remember, once an offer is made to you, ask to see all of the particulars in writing. A verbal offer may sound great to you, but without the paperwork to back it up, it is worthless.
May
22
2010
Anyone who has every had to look for a mortgage will tell you how important it is to check various mortgage rates to ensure that you are getting the best interest rate and the best mortgage for you and your finances. In the past, searching for mortgage rates meant calling lenders and finding out what their rates were, as well as their terms. This was a long process that many people balked at – and many didn’t do at all because of the amount of time that it took. However, now you’re in luck. Finding mortgage rates for comparison has never been easier thanks to the Internet.
The Internet has opened a whole new realm of competition between lending institutions, which is beneficial to mortgage rate seekers. This means that the information about different mortgages, including the mortgage rates, is just a few clicks away for anyone. It’s important that you have your ducks in a row, and that you have a mortgage in place before you begin to purchase a home. Having a mortgage in place will tell you how much money you can spend on a home and you will go in knowing how much it will cost you. This can help make your decision on the upper limit you want to spend on your home – you may want to save some of that ‘mortgage credit’ to upgrade the home you choose, so spend carefully.
The very first thing you need to do when looking for a mortgage is create a database so that you can make your comparisons. Microsoft Excel, or a similar program, is perfect for this, because you can have multiple tabs for different types of mortgages and you can lay it out so that it is easy to understand when you begin to make your comparisons.
Your database should compare an in-depth comparison of the many options and rates associated with a mortgage. Your database should include:
Mortgage type (adjustable rate mortgage, fixed rate mortgage, balloon, etc.)
Interest rate overall
Index rate (that the lender uses to create the final interest rate)
Lender’s margin (percentage point that is added onto the index rate by the lender)
Lengthterm of the mortgage
Any other features that make or break a mortgage to make it more friendly to your finances
The first thing you should do is compare the interest rates. These can vary quite a bit, and it’s important to understand how they work. Regardless of the type of mortgage that you get, the lender will base the interest rate on an index. The most common indexes used to determine the interest rates are:
One-year constant maturity treasury securities (CMT)
Cost of Funds Index (COFI)
London Interbank Offered Rate (LIBOR)
A lending institution’s own costs of funds.
On top of that index interest rate, the lender will attach their margin percentage. The margin ensures that the lender will make money on your mortgage at a fairly steady stream.
It’s also important to note that when you are looking at the interest rates, the very first thing that will jump out at you is how ‘low’ the adjustable rate mortgage interest rates are. While they can be very compelling, in some cases several percentage points lower than a fixed rate mortgage, it’s imperative that you check out all the factors that pertain to an adjustable rate mortgage, including:
Payment cap
Interest rate cap
The margin
How often the rate will adjust
Prepayment penalties on the mortgage
How long you will be staying in the house
Most adjustable rate mortgages appeal to home buyers who only plan to live in the house for three to five years – this means they can take advantage of the lower interest rates and pay less, while not having to worry about drastic increases in the interest rate over a longer period of time.
To use the Internet, all you have to do is go to a major search engine and search for ‘mortgages rate’. You will find thousands and thousands of results, literally. There are many websites that offer mortgage rate comparisons online from many different lenders as well. But, by doing your own research, you may be able to find some smaller company that is offering great interest rates. The best place to start is with an idea of where you want to look – your friends, relatives, neighbors, other home owners, forums on the Internet, your realtor – all of these people may be able to give you some referrals to mortgage lenders that you should check out.