Homefinding Book

Most of us think that getting a mortgage loan while keeping a bad credit score is a tedious job. But the situation is entirely different in the market. Due to the rising competition in loan market there are lots of lenders who provide loans especially for bad credit holders.

The Basic Steps
Becoming a bad credit holder is not a crime as there may be many reasons for that. First prepare a FICO scorecard before approaching a lender for a mortgage loan. The best you can do is approaching a reputed bank or reputed private organization which helps you in calculating your credit score. There are lots of terms involved in calculating a scorecard. In any case the lender will only have a look at your final scorecard. So try to settle some debts before applying for a mortgage loan. This increases your credit score to some extent.

A bad credit holder can apply for mortgage loan by keeping his home or land which is already under some other loan. Here the loan will be considered as 2nd mortgage loan. In second mortgage loan the interest rates will be little bit high and the lender will settle the loan amount in front of your old lenders. Here the bad credit holder can have an excellent option. He can calculate all his debts and claim for a loan that settles all the old loans. Doing this reduces the number of loans and he need to pay interest rate for only one loan.

There won’t be much difference whether your FICO score is 620 or your FICO score is 780. Many lenders don’t see the credit score. All that matters for them is the down payment. Paying larger down payment lets the bad credit holder to get high loan amount with less rate of interest. Before buying a home don’t ever take a decision of purchasing a new car or a brand new motorcycle on loan. Because the lender who offers you bad credit mortgage loans will see your pending bill on that car or motorcycle.

Before approaching the lender for mortgage loan try to have fewer accounts opened in the last 12 months and maintain less number of revolving accounts. Try to improve our credit score to the maximum extent you can because some lenders reduces the points on interest rate with the increase in your credit points.

Getting a bad credit mortgage loan will need you to place some security to the lender. There are bad credit mortgage loans that don’t require any security involved. But in the case of no security mortgage loans you need to pay little bit high interest rates and the repayment time will be less. So it’s better showing some sort of security if you are able to do so. A bad credit holder can claim for as many bad credits mortgage loans as he can till he is able to show some sort of security and assure the lender by paying high down payments. So when these many opportunities are available, why a bad credit holder should think about getting a bad credit mortgage loan?

Foreclosure is something homeowners don’t want to think about when they first plan to buy a new home. But it’s a bitter truth that more and more homeowners are facing with each passing day. Although none of us plans anything like unexpected job loss, divorce, and sudden illness, these things are part of life and they come without notice. In such a situation, paying monthly mortgage payments becomes impossible and people often face the unthinkable – foreclosure on their beloved property. But the good news is there are ways to avoid or stop foreclosure and to save your property. Let’s find out how.          

The first thing you need to know is that foreclosure does not benefit the lenders. Although they want to make sure that the loan will be paid off on time, they try to avoid foreclosure because there are simply too many costs involved in this procedure. They may file a Notice of Default to remind the borrower that they need to make their payments before a certain deadline, but they will also wait for at least 12 to 24 months before initiating the actual process of foreclosure. During this time you have the option of taking steps to stop this impending dread by either arranging for payments, having the terms of your loan changed, or selling your home at market value.   

If you think you will not be able to pay your mortgage payments for the next few months to come, immediately let your lender know. Sometimes lenders may give you a break and forgive your current payment provided that you agree to pay it after a specified time period. This is called forebearance and it’s an effective way to stop foreclosure. Mortgage lenders usually try to work out a repayment plan with homeowners to avoid foreclosure. If, however, your lender does not accept any of your pleas you may want to go for a short sale.

You will have to convince your lender to initiate the process of a short sale by accepting discount on your outstanding loan amount. Real estate investors are always looking for opportunities to buy properties before they go into foreclosure at a reduced price. For borrowers this option is beneficial if they owe more than the house is worth. Although this option does not allow homeowners to save their property, they can at least get out of debt and start living a free life.   

If you don’t want to lose your home, there is option of refinancing. This way you can ask the lender to extend the repayment time or lower interest rate to allow you to pay the debt more conveniently. Although it’s a favorable option for the borrowers, they are required to pay an upfront payment to initiate the process of refinancing. Some borrowers may not afford to pay this amount. If short sale, refinance, and forebearance are not the options for you, you may want to deed the home back to the lender to avoid foreclosure. But this should be your last resort because it is nearly as negative to your credit as foreclosure. 

Finding your dream house in a suitable neighborhood and hiring a real estate agent to handle the transaction is only the first step in buying a new home. The major work starts when you actually have to handover the payment to the seller and go to settlement. In addition to a Realtor you may also need the services of an escrow agent who will handle the details and paperwork involved in the deal. The importance of escrow arises from the fact that you cannot trust anyone blindly. A trustworthy escrow company keeps your money till the closing on your new home so that you can be sure that your money is in safe hands.      

Escrow is beneficial for both parties – the seller and the buyer. The seller is assured by the third party escrow agent that they will receive payment on closing and the buyer knows that the loan they acquired to pay for the house is out of harm’s way. You are not the owner of a house if you have not gone to settlement on it. The settlement or closing is handled by the escrow agent who has a few roles to play in this context. This agent has to get in touch with all parties involved: the buyer and the seller, the title insurance company, and the lender.  

The role of an escrow agent is to ensure that all parties are satisfied by the end of the day. The lender is able to get a good mortgage, the buyer ends up with a clean title, and the seller is able to pay off their mortgage. All funds accumulate in the escrow account until everything is settled and all parties agree on the terms and conditions. During this time the seller performs any repair work or fulfills other responsibilities agreed upon in the purchase contract.  

Work with your Realtor to see that everything is handled properly and nothing is overlooked. Normally the purchase contract has a closing date until that day the escrow agent remains involved in the process. On the closing date everything has to be settled, documents have to be signed by both parties and money has to be handed over to the seller. In case there is a dispute between the two parties, this date may be postponed. It is also mentioned in the sales contract when exactly the buyer can move in the newly-bought home and this is not necessarily the same as the closing date.

Mortgage settlement costs vary from location to location and they can be fairly high in certain circumstances. The total fee is calculated by adding the charges for transfer of ownership, amount that has to be paid to local and state governments, and costs associated with getting a mortgage. At closing, you get different disclosure statements to determine the actual cost of the loan transaction and to deposit just the required amount in escrow accounts for payment of property insurance and taxes.

An escrow agent is not an attorney; however, there are some attorneys who offer escrow and settlement services.

A commercial mortgage is taken on for buying commercial buildings instead of residential property.  They are typically applied for on behalf of a business or a company, instead of individuals. These types of loans work in a similar manner as home mortgage loans but they normally have higher interest rates. Furthermore, it is expected of business owners to return their entire loan as one balloon repayment after the initial period of 5-10 years. However, the borrower has the option of refinancing after a few years with a new interest rate which might be lower than before. Commercial loans are therefore simpler than adjustable-rate mortgages.

If you are not sure how well your business will do in the next 15 years, taking a commercial loan can be dicey. At the end of 7 years, if your business is not doing well you may lose all hopes of getting a refinance. ARM loans, on the other hand, are safer because they provide protection against interest rate explosion after a period of 7 to 10 years. However, there is an option of going for private financing companies instead of banks for a commercial loan. These companies may have different rules regarding repayment after an initial period. One disadvantage is that these types of loans usually have high interest rates.

Commercial lenders normally provide a wide array of loan options to choose from. Some may also offer non-commercial loans for a business and in most cases are not very much concerned about how and where you spend the money. However, they do ask for a detailed business plan to decide if you are eligible for a commercial loan. Banks usually take a long time to process your commercial loan application and if, due to some reasons, they decline your request you will have to apply for a mortgage all over again.  

To acquire a commercial loan you will have to provide a solid proof of your financial stability. If you are starting a business for the first time and have no previous healthy financial record, you may not qualify for this type of loan. Furthermore, there are strict requirements to be met for commercial mortgage loans and usually collateral is also required for securing this type of loan. Some people go for a commercial loan for buying a home, but this can be risky. If you are unable to repay the entire balance after the initial period, chances are you may lose your home.     

There are some hidden costs associated with a commercial loan which can be quite high. These fees have to be paid before the loan is approved and therefore it is better to apply for non-commercial loans if you are buying a property or a new home. Moreover, commercial mortgage loans should only be considered if you are sure where your future income will come from and whether you will be able to repay the loan after a few years or not. Furthermore, do check out both private financing companies and banks to see which option is more suitable to your plan. 

If you are planning on buying a new home or investing in a business, you may need to clean up your credit before applying for a loan. Lenders need to check your financial history to decide whether you will be able to repay the loan after a few years or not. Your credit report is prepared by credit bureaus and they receive information from companies that gave you credit in the past. This report normally contains information about any late payments or overdue bills. You can now request a free credit report online to understand your credit score and what it means.  

Your overall credit score is also known as FICO. This score ranges from 300 to 850 and is different on all three credit reports received from three credit bureaus. Experts would tell you that your score needs to be way above 600 to be called a good score. If you have a lower score, you will have to pay a higher interest rate for acquiring mortgage. And in some cases your application may be rejected altogether because of a low credit score. So, you need to improve your FICO credit score before planning to invest in a business.

Basically your credit score is made up of five entities: payment history, length of credit history, new credit, types of credit in use, and total owed amount. There are ways to improve on all these areas to clean up your credit. Sometimes your credit report may contain misleading or negative information regarding your credit history. This can be corrected by appealing to the credit bureau and requesting changes to be made to your report. However, it is not advisable to call the credit bureau because they record all calls and may present them later on as evidence against your competence. Instead, write a letter to the bureau and send some supporting documents along.    

The total amount you owe as debt is an important factor that largely determines your credit score. It is advisable to keep this debt under an acceptable limit. If the outstanding amount is high, defer your plans of acquiring a loan for investing in real estate and pay attention to paying the debt first. Some people close their old accounts to get a fresh credit report. However, this is a mistake which you should never commit. The length of your credit history is another major aspect that can have significant weight on your overall credit score. 

Moreover, it is advisable to stick with a few accounts rather than opening new ones for no reason. New credit has 10% impact on your FICO score. The payment history section also mentions declaration of bankruptcy in the past in addition to late or overdue bills. You need to tell the credit bureau that a certain amount of your unpaid debt is due to the discharged items in bankruptcy. This is very important as the payment history section has 35% weightage in the overall credit score. 

People who want to invest in real estate look for opportunities such as foreclosure short sales which allow them to buy at a low price and sell at a high price. This way they can make huge profits. Homeowners that fail to pay their mortgage payments face foreclosure on their property and through a short sale this property is sold to avoid foreclosure auction. Short sales highly benefit the investor because in such a case lenders accept a markdown on a mortgage. In a typical short sale scenario, instead of buying from the owner you buy the property from the creditor or the company who paid for the property.

Banks involve in short sales to avoid possible bankruptcy and this can be a huge opportunity for the investors. Moreover, they also want to keep away from foreclosure auctions because in such a case they would lose much more money than selling the property at a discount through short sale. Short sales can be bought at two stages: before the property faces foreclosure and is still in the owner’s hands, and when the property faces the actual foreclosure and goes in the bank’s possession. It’s better to invest in a short sale when the property is in the pre-foreclosure state.

However, the process is not as simple as it sounds. The seller has to be contacted to issue a letter in which the details of the loan are authorized to be released by the bank. Then, it’s not easy to convince the lender to initiate the procedure of a short sale. The seller also needs to write a hardship letter to explain their financial position and to make the process of evaluating their assets easier for the lender. If the suggested price of the property is acceptable to the lender, they initiate the procedure of a short sale.    

The lender saves many costs associated with the foreclosure process by initiating a short sale. However, they will hire a real estate agent or broker to find out the value of the property. It’s your responsibility to convince the lender that your suggested price is in accordance with the condition of the property along with other factors that may have an influence on the value of the property. Short sales are also beneficial for homeowners, because this way they can avoid a negative rating on their credit report. They have at least 6 months’ time period to sell their home at its market price.

Homeowners place ads in local classifieds to find potential buyers before their property goes into foreclosure. Be on the lookout for such ads to find properties you can buy directly from the seller. To benefit from a short sale you will have to find homeowners who are more than 3 payments behind on their mortgage. If you are late in contacting such a homeowner, you will have to buy the mortgage from the lender instead of the property which will be offered at a discount. So, it is advisable to act fast if you decide to be part of a short sale. 

Whether you are applying for fixed-rate mortgage or variable-rate mortgage, you have the option of attaching an additional feature to it: interest-only loan. Some people think it’s a type of mortgage but it’s not. Interest-only mortgage allows you to pay only the interest in any given month if you don’t have enough money to pay off some amount of the principal. However, this is allowed only for a specified period of time after which you have to pay the interest as well as the monthly installment. Like any other financing option, interest-only mortgages have their advantages and disadvantages. Before deciding to apply for this type of loan for buying a new home, consider all its features and only proceed if you think it’s the best available option for you.

If you are expecting to earn a lot in the coming years and if you plan on selling your home after a few years, then interest-only loan might prove to be a beneficial option. In addition to this, the amount you save by paying off only the interest can be invested somewhere else which you think will bring huge profits. That profit can then be used to pay off the principal after your initial period has expired. If you are able to get a low interest rate on a fixed-rate mortgage, this option will allow you to avoid the rising interest rates and pay only the interest portion every month. Even in a fixed-rate plan, if you pay some amount of your principle each month along with the interest, the next month’s interest will be reduced.

First time homebuyers often end up selling their home after a few years. If you have planned ahead for the next five to seven years, you may want to consider this option. However, if you are not sure how you are going to pay back the loan or when exactly will you be able to pay off the entire principal, then consider some other financing options instead of interest-only mortgage. This is because you will need to refinance after an initial period of five or seven years and this might not come easy. Furthermore, the facility to pay only the interest and not the principal will not be available and the amount you owe each month might not be easy on your pocket.           

Some people think that availing this option eventually allows them to be debt-free by paying less. This is a false impression probably advertised by those who want to sell their plans. An interest-only loan is an advantage which anyone can benefit from who has future plans to invest in a seemingly profitable business and needs capital for that. Furthermore, you may not get a low interest rate if you are availing this option. The first thing to do is to decide whether you need fixed-rate or variable-rate mortgage. For adjustable-rate plan, the interest-only option can be even more confusing for the borrowers. You can check out your amortization timeline by using the interest-only mortgage calculator.          

The experts say that only business-owners can benefit from interest-only mortgages because they don’t have a regular salary. Sometimes they get lucky and their profits are huge. They can easily pay off the principal along with the interest. But for an average working person whose only income is the monthly salary he receives from his company, interest-only mortgage can prove to be devastating. Then there are market risks involved in this type of a plan, considering you decide to sell your home in order to pay the debt. Still, after consulting with your mortgage agent, if you think this option is going to be beneficial in the long run, go for it.    

Before you qualify for a decent mortgage loan, some requirements have to be fulfilled. There are many types of loans and to know which type of mortgage you will be offered largely depends on your credit score. Not obtaining a credit report before applying for the loan is a mistake many first-time homebuyers make. Let’s discuss the different types of mortgages before proceeding with the credit score. There are basically four types of loans: fixed-rate, adjustable rate, balloon loan, and government loans. Fixed-rate mortgage can be obtained for 15, 20 or 30 years. If your credit score is good, you can get a lower interest rate and it will stay the same over the years for this type of mortgage. The 30-year fixed-rate mortgage is often the easiest to obtain.    

If you plan to sell your home in the near future, variable or adjustable rate mortgage will be best suited to your requirements. This is because the first interest rate that you pay is usually lower than the subsequent installments. Balloon loan refers to the type of mortgage in which you have to pay small installments for a period of five to ten years and after that the remaining amount has to be paid at once.

Many parts of your credit report are scrutinized by the lender in order to see whether you quality for the loan or not. One of these aspects is your debt-to-income ratio. The lender will need to know how efficiently you have paid back your past loans. If your debt-to-income ratio is bad, you should first consider paying off at least some amount of the debt before proceeding with your decision of buying a new home.        

Your credit score also reveals the total amount of money you owe as debt. If it is a huge amount, you might not qualify to get loan for your new home. However, there are ways to improve your credit rating either by paying off the debt or attempting to correct the mistakes that might make your credit score look bad.

Many people ask the question what should be the credit score to qualify for a mortgage loan. Normally, a credit score of 750 or above is considered excellent. Even if your score falls in the range of 600 to 650, you have pretty high chances of securing the loan. But if it is lower than this, you may want to reconsider your decision of buying a new home.

Always try to keep your credit history clean by regularly inspecting your credit report for correctness. Opening new credit car accounts when you are not going to use them can also have a negative effect on your credit rating. If you cannot afford something, don’t plan on buying it through credit. Always pay your bills on time instead of piling them up. Your credit score is also affected by the degree of delinquency on your report. Even after you have paid off the bills, delinquencies will stay on your credit report for an indefinite period of time. So, it’s a good practice to shell out all due payments on time.

For those who have a low credit score, there are several options available in the government loans category, one of which can be availed to buy a new home. In fact if you are a first-time homebuyer, the government FHA loan might prove to be the best available option for you. There are many advantages of this type of loan. Although the interest rate in a FHA loan is dependent on your credit history, it’s still not very difficult to secure this type of loan for home buying.

Get your credit report today and see which option best suits you.            

With the cost of gas, diesel, and additives constantly rising, I have been searching for real alternatives to save money at the pump. Most of my research comes up with rebate deals (too much work), coupons requiring credit card numbers, Internet or phone activation (again - too much work), and coupons that require you to complete surveys. Most of these are marketing programs that have no merit as you are working too hard for a small, one-time, discount, with many restrictions.

The only program that I found to be legitimate, easy, and productive is the GasMaster pre-paid Visa cards, only available through the GasMaster distributors. This program is big in Florida, and uses a concept that Costco, BJ’s, and Sam’s discount clubs are famous for. You join the discount club for $159, and then you are entitled to buy up to $300 per month of gasoline debit cards.

The Gas Master Discount Club offers 20% Off gasoline through prepaid VISA gas cards.  Savings are up front. In other words, you pay $80 for a $100 card  but  will have the full $100 to use at any gas station and  convenience store attached to a gas station. Pay $240 for a $300 card, etc.

The prepaid gas cards can be used at any gas station nationwide that accepts the Visa logo. The discount club also offers savings on hundreds of other products and services at their online mall.

Remember, this is only available through authorized distributors, and everyone wants to save. There is still room for distributors if you want to supplement your RE income. It’s great to do part time.

Visit www.RealtorsGasClub.com which will take you my page on the GasMaster site to learn about buying gas at 20% off.

This program is big in Florida, and needs promotion throughout the US; currently it is in operation and growing. Credit cards (like Discover) offer you 5% on a credit purchase, BJ’s and MasterCard programs offer about 2% on general purchases, but GasMaster offers a true 20% discount on pre-paid cards.

Non-Realtors can join as well, making the savings available to anyone who drives for a living. Feel free to share with family and friends.

The one thing that everyone wants when applying for a mortgage is an excellent mortgage interest rate. The interest rate you pay will determine how much money you end up repaying the bank when all is said and done. The lower this number, the less money you will owe over time. The less money you owe over time the less money you will need to pay each month in order to cover the costs of owning your home.

It pays to know the steps you can take to get a great mortgage rate on the purchase of your home. So, what can you do in order to be sure that you are getting the lowest rate possible?

Fix Credit Snags

The most important thing you can bring to the table with you when applying for a mortgage is good credit. The better your credit rating is the more likely you will get a decent rate on your mortgage. If you have a few credit hiccups you may want to apply and see what is said. Worst case scenario you don’t get favorable terms and try again down the road

If your credit rating is dismal you should make efforts to improve your credit score before applying for a mortgage. A good faith effort on your part can go a long way to ensuring that you get a much lower interest rate though it may take some time to earn the prime interest rate that you are hoping for.

Depending on how bad your credit issues may have been it may take quite a while to get things under control and restore your good name - at least when it comes to credit. This is a marathon. You didn’t find yourself in a poor credit state overnight in most cases and it will take a concerted effort on your part to make the necessary improvements.

Shop Around

Believe it or not, there isn’t a one size fits all lending program that promises the same interest rates from one lender to the next. You can actually get better interest rates by checking out the competition locally and nationally before making your final decision. To get the best possible rates for your mortgage shopping around is probably the best thing you can do other than maintaining an impeccable credit rating. A great place to shop for mortgages is Lending Tree.

When you take it on the road, so to speak, and see what the competition has to offer when it comes to interest rates, it does two things. First, it lets you know that you have other options available to you. Second, it lets lenders know that they are facing some competition. This often encourages them to give you the best rate they can possibly offer or add incentives that may be attractive and beneficial in the long run.

Have an Impressive Credit Record

There really is nothing that can bring those interest rates down on your mortgage like credit that is above reproach. If you want the best possible mortgage rate then you will want to make sure that you are bringing an impressive record for prompt payment to the table with you.

Getting a great mortgage rate is only half the battle when it comes to getting a mortgage but for many home buyers, it is the most important aspect of the home buying process. Make sure that you are prepared to wait it out and find the best mortgage rates before signing on the dotted line with any lender. Patience is definitely a virtue well rewarded when it comes to getting the mortgage you deserve. To get the great rates your good credit deserves be sure to check your options at Lending Tree.