The pros and cons of different types of loans

4 Mortgage Mistakes First-Time Home Buyers Should Avoid

Posted by on Sep 1, 2016 in Uncategorized | Comments Off on 4 Mortgage Mistakes First-Time Home Buyers Should Avoid

If you’re like most first-time home buyers, you probably need a mortgage loan in order to complete your purchase. The things you do in the months before you begin your home search can make a big difference in whether you are approved for a mortgage, as well as in the interest rate you are offered. If you plan on buying your first home soon, avoid these common mistakes: Not Checking Your Credit Report Your credit report plays a major role in the mortgage process. The information on the report will be reviewed, and your credit score will be considered when a lending institution is processing your mortgage application. Before you submit any information to a lender, make sure you carefully look over your credit report. If you see any errors, contact the credit reporting agency to have them fixed. It is also a good idea to pay down any debt that is being reported on your credit report. Making Large Purchases When you need a mortgage loan, the key is to reduce debt, not take on new debt. Prior to getting a mortgage, it is in your best interest to avoid financing any large purchases, such as an automobile. You should also refrain from making big purchases on your credit card. Save these purchases for after being approved for a mortgage and actually closing on your first home. In addition, do not open up any new credit card accounts or other lines of credit. Not Getting Pre-Approved Being pre-qualified for a mortgage is not the same thing as being pre-approved for a mortgage. Before you begin searching for your first home, it is important to be pre-approved for a mortgage. This means that all of your financial information has been reviewed and gone through underwriting, and you have been formally offered a loan. Being pre-qualified just means that a financial institution thinks that you’re a good candidate for a mortgage and they may be interested in lending to you– but there are no guarantees. Job Changes If you plan to get a mortgage soon and begin looking for a house, it is important to not make any changes to your employment status. Even if you hate your job and want to move to a new company, stick around in the same position at the same rate of pay until your mortgage is approved and you close on your house. Changing jobs during the mortgage process may put your loan at risk. Contact a mortgage company in your area for additional...

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Helpful Tips for Increasing Your Odds of an Approval for a Home Loan

Posted by on Aug 10, 2016 in Uncategorized | Comments Off on Helpful Tips for Increasing Your Odds of an Approval for a Home Loan

If you would like to purchase your own home in the future, you will need to take action now in order to give yourself the best chance at being qualified for a home loan. To better your odds of approval, you will want to take a couple of minutes to review the following advice. Improve Your Debt-to-Income Ratio Even if you think that you can afford a home mortgage with the current income and bills that you have, you will want to do your best to improve your situation a little more. The better your debt-to-income ratio is, the more likely it is that the home-loan company will approve your loan. They want to know that you can not only afford the mortgage payment but also the property taxes, homeowner’s insurance, and any unexpected expenses that may pop up without running behind on the loan. Therefore, do your best to pay off as any revolving debts as you can and increase your income, even if that means taking on a second job or signing up for some steady overtime. Double-Check Your Credit Reports for Mistakes Do not make the mistake of assuming that everything that is reported on your credit report is completely accurate. Mistakes can happen, so it is important to make sure that you are are spotting any that may exist on any of your reports. Remember to pull a copy of each one of your major credit reports, as each report will not necessarily have the same information. Read each report over carefully to look for old debts that should no longer be on your report, improperly reported account balances, or any signs that there has been an instance of fraud. Do this as soon as possible so there will be plenty of time to file the disputes and wait for a review of your reports, as we as time for your credit scores to be adjusted after the mistakes are corrected. Start Saving Money in a Bank Account You want to not only have as much money saved as possible for the down payment and closing costs of the home purchase but also to make sure that there is a paper trail for that money. The reason for this is because many lenders want to see extensive proof of your income and savings for many months. The more you are able to prove that you are financially prepared for this purchase, the easier it will be for the lender to approve your loan request. By simply making use of the previously mentioned advice, you should have a much easier time getting approved for the loan that you will need to purchase the home of your dreams. Go to websites of various home-loan companies for more...

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Facts You Should Know About Using A Rehab Loan

Posted by on Jul 8, 2016 in Uncategorized | Comments Off on Facts You Should Know About Using A Rehab Loan

As the result of the recession that recently impacted the United States and that is still affecting many Americans, there are a lot of abandoned homes that could be purchased for very reasonable prices in some areas. As an investor, it is possible to make a tidy profit on those properties, but many of them will need structural or cosmetic work in order to be appealing to your target market. Alternatively, you may also be considering a rehab loan, also known as a remodeling or home improvement loan, to make necessary changes to your current home. Fortunately, rehab loans are available that can help you to afford the necessary work, and the following information will help you to better understand the details associated with a rehab loan. There Are A Variety Of Loans That Are Available It is important to note that there are multiple options to choose from selecting a rehab loan. As a result, You should have an understanding of the various options. For instance, a private individual might do well with a purchase/relocation loan. That option is often a good choice when you hope to get the improvements as soon as possible after completing the purchase of your home. Alternatively, the FHA 203k is often appropriate for an individual (so you cannot be part of a corporation) who might otherwise have trouble getting the necessary funds due to a low income.  Your Rehab Loan Can Be Used For Many Different Types Of Improvements One common concern is that the rehab loan can only be earmarked for specific type of improvements to the home. While it is true that there are some limitations, there are still many ways that you can spend your borrowed money. For instance, if the roof, gutters and windows need to be upgraded or replaced, a rehab loan can help you to do so. In addition, you may also find that the funding will help you to add bedrooms, bathrooms and other important areas, while even landscaping can benefit from your loan as well. A pool and hot tub can be added to the yard as can a deck or patio. In conclusion, a rehab loan is often an ideal way for investors to revitalize a house that needs work in order to be re-sold or rented. As a result, information provided above is likely to be very helpful, whether you are a homeowner looking to make some improvements or you are investor hoping to make some cash.  For rehab loans, contact a company such as Crossroads Investment...

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Options To Avoid Foreclosure On A VA Home Loan

Posted by on Jun 14, 2016 in Uncategorized | Comments Off on Options To Avoid Foreclosure On A VA Home Loan

Military members and veterans are offered several benefits as a result of their military service. VA Home Loans allow military veterans to obtain a mortgage loan with little to no down payment, and lower loan origination fees (2.15% with no down payment, 1.25% with a 10% down payment on a first-time VA Home Loan) than a conventional home loan. A VA Home Loan comes with many benefits that aren’t offered with conventional home loans. The current state of the economy is improving, but many home loan recipients are still finding themselves unable to cover mortgage payments. Every three months, more than 250,000 families enter into the foreclosure process in the United States. If you purchased your home with a VA Home Loan and are having difficulty making payments, you have options to avoid foreclosure.  VA Can Negotiate With the Lender VA does not issue mortgage loans – the VA Home Loan process only guarantees a portion of the mortgage loan in the event the borrower cannot pay. However, VA will negotiate with lenders on behalf of borrowers in an attempt to help borrowers avoid foreclosure. VA has dedicated staff members that act as liaisons between borrowers and lenders to help obtain reduced payment amounts, modified loan terms and alternate repayment options to help veterans stay in their homes and protect their credit. Veterans may call to request assistance with mortgage issues and other VA benefit questions. Mortgage Lenders May be More Willing to Work With VA Home Loan Recipients Nine out of ten VA Home Loans are written with no down payment. Despite this fact, VA Home Loans have the lowest foreclosure rates of any type of home loan. This is due in part to VA’s dedication in helping keep veterans in their homes. It is also due in part to mortgage lenders who are willing to work with VA and VA Home Loan borrowers to keep families in their homes. If you are the recipient of a VA Home Loan and find yourself in financial difficulty, don’t wait to contact your mortgage lender for assistance. Taking a proactive approach will keep you in your home and avoid a hit to your credit rating. Your mortgage lender will most likely be willing to work directly with you to help you renegotiate the terms of your mortgage and adjust your payments. If you are met with resistance from your mortgage lender, you should contact VA immediately for assistance from a veterans home loan...

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Deciding Between A Fixed Rate Mortgage And An Adjustable Rate Mortgage

Posted by on May 11, 2016 in Uncategorized | Comments Off on Deciding Between A Fixed Rate Mortgage And An Adjustable Rate Mortgage

When you are comparing mortgages, one of the first questions you will find yourself asking is whether you want a fixed-rate loan or an adjustable-rate loan. Fixed-rate loans have a fixed APR throughout the life of the loan. This APR tends to be higher than the initial APR offered for many adjustable-rate loans. However, after an initial period, the adjustable-rate loan’s APR may increase, giving you a higher APR than the fixed-rate loan initially offered. When deciding between the two, you should ask yourself these four questions.  How Long Will I Have This Mortgage?  Generally, the longer you have a loan, the riskier it is to accept an adjustable-rate loan. This is because the APR can increase multiple times throughout the life of the loan. However, if you have a short-term loan and the initial fixed-period of an adjustable-rate loan covers a significant portion of that time, an adjustable-rate loan may not be as risky. For example, if you are looking for a 15-year loan with an initial interest period of 5 years, then it is unlikely that you will end up with an overly high interest rate. However, if you have a 30 year loan with only 2 years of a fixed interest rate, there is a chance that the APR will increase significantly before you pay off the loan.   Will I Be Able to Lock In a Fixed Rate Later?  Many lending institutions allow you to switch from an adjustable-rate loan to a fixed-rate loan later in the life of the loan for an additional fee. Alternatively, you may be able to refinance with a fixed-rate loan. Ask about these options before you agree to an adjustable-rate loan.  Is There a Cap On an Adjustable Rate Mortgage?  Most adjustable-rate loans have various caps on the amount that the interest rate can be raised and how often it can be raised. You want to look for loans that can only be raised a small amount each period and do not have several periods over the life of the loan.  Can I Handle Financial Surprises?  If money is tight and you want to be sure that you will be able to afford your loan payments, a fixed-rate loan can give you peace of mind as to your monthly payments. Since an adjustable-rate loan changes over time, it is not a good option for people who do not have financial flexibility.  These questions should help you determine if an adjustable-rate loan is worth the lower initial interest rate and whether you can afford it over time.  For mortgage loans, contact a company such as TruPartner Credit...

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Understanding Why Mortgage Interest Rates Vary

Posted by on Mar 30, 2016 in Uncategorized | Comments Off on Understanding Why Mortgage Interest Rates Vary

Whether you are a first-time home buyer or have purchased a home previously, understanding why interest rates vary can seem confusing. But how much you pay in interest definitely affects how much your mortgage payment will be each month. Therefore, it helps to know what goes into a mortgage rate and why they vary. Why Rates Vary by Borrower There is no set mortgage rate for every borrower who applies for a mortgage loan. Lenders may advertise competitive rates, but the rate you actually pay will depend on your: Credit score Income Debt-to-income ratio (monthly debt payments compared to your gross monthly income) Loan-to-value ratio (loan amount divided by the home’s value) Lenders also consider the amount of money you want to borrow, the type of home you want to buy (e.g. single- or multiple-dwelling), and how much of a down payment you can make when offering you a mortgage interest rate. Whether you pay points will affect the interest rate as well. A lender generally offers you a lower interest rate if you pay points (1 point equals 1 percent of the loan amount). Points are a fee you can pay at closing to lower your monthly mortgage payment. The lower the mortgage interest rate a lender offers you, the lower your monthly mortgage payment will be. Why Rates Vary by Lender Mortgage rates vary by lenders who are competing against each other for your business. Even FHA rates vary among lenders. Some mortgage lenders focus on offering the lowest rates; other may charge higher interest rates in exchange for exemplary customer service or a trusted name in banking. Since you can choose from a wide variety of banks, credit unions, and other mortgage lenders, there is no need to get only one quote. Chances are that not shopping interest rates or requesting quotes from more than one lender will cost you money because you may be paying more than you have to pay. The interest rates on home mortgage loans can change from one day to the next. But even a rate that is a fraction of a percent lower can save you money each month – not to mention over the lifetime of the loan. For instance, if a lender offers you a fixed interest rate of 4.50 on a mortgage loan for $150,000 over a 30-year term, your monthly mortgage payment will be $760.03 However, if another lender offers you a rate of 4.25 on the same loan amount, the payment will $737.91 a month. You will save $22.12 a month, yielding an annual savings of $265.44. Why Rates Vary by State Since each state has its own laws governing mortgage loans, mortgage interest rates also vary by state. In some states, including Alabama, New Jersey, Pennsylvania, Texas, and Vermont, mortgage lenders aren’t allowed to charge borrowers prepayment penalties. Other states limit the amount of the penalties lenders can charge. Also, in states with Homestead laws, mortgage lenders are prohibited from charging certain loan fees. Therefore, in cases like these, to make a profit and reduce the risk involved, lenders often charge higher interest rates. For more information, contact Premium Mortgage Corp or a similar...

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Paying Installment Loans Early Or On Schedule

Posted by on Feb 15, 2016 in Uncategorized | Comments Off on Paying Installment Loans Early Or On Schedule

If you’ve taken out a loan, the infusion of cash into your life can be very welcome. But that also means that now you’ve got these monthly payments to make. Even if the payments are easy for you to afford, seeing the extra cash flow out of your account every month can be tiresome, leading you to try to pay the loan off early. However, sometimes paying the loan back early isn’t the best thing to do. Here’s a look at how paying the loan back early or paying it as scheduled can affect you, and which strategy might be better for you. Paying as Scheduled Paying the loan installments as scheduled may have a greater effect on your credit score if the installment loan shows up on your credit report. Paying the loan on time, of course, is most important. But the longer you have to pay the loan back, the more on-time payments will show up on your credit report, and that means you’ll have a longer record of payment to raise your score. You can certainly see good effects on your score by paying the loan early in a few large installments, but more installments prolong the effect. If you’re hoping to get a good boost for your credit score from the loan, you may want to make payments as scheduled rather than early. Paying the installment loan as scheduled instead of early also means you’ll be able to retain more money in your bank account from the start of the repayment schedule. If you’re paying as scheduled, obviously you’d be paying a smaller amount of money each month than you would be if you were trying to pay the loan off early. You can use the money left in your account for emergency savings immediately. If you were to make bigger payments to pay off the loan early, then that extra money would be unavailable to you should an emergency occur. If the loan is large and making larger payments wouldn’t pay off the loan in a very short time (a few months, for example) — especially if you don’t have much of an emergency fund to begin with — you may be better off paying as scheduled, at least until you can get a decent emergency fund built up. Paying the Loan off Early On the flip side of that, though, is the fact that if you pay off the loan early, you free up even more cash in your budget at an earlier date. For loans that are small or that you could pay off in a very short time with larger payments, paying early would be best, especially if you already have an emergency fund. Paying the loan off early means you have one less payment taking money out of your account. Plus, if you pay the loan off early, you will end up paying less in interest in most cases. Your interest rate likely won’t change, but fewer payments means fewer opportunities for the lender to gather interest. Note that this depends on the type of installment agreement you set up; some agreements have a set number of payments with a final amount that does not change if you make any payments early. But if you can reduce the amount of...

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3 Things To Keep In Mind When Considering A VA Home Loan

Posted by on Jan 8, 2016 in Uncategorized | Comments Off on 3 Things To Keep In Mind When Considering A VA Home Loan

A VA home loan is a great resource for any current military personnel and individuals who have been honorably discharged, medically discharged, or who simply decided to retire. Listed below are just three things to keep in mind when considering a VA home loan. Entitlement Limitations One of the biggest things to keep in mind when looking at a VA home loan is that there are going to be limitations to the entitlement that you receive. When you are eligible for a VA home loan, you will be given a single entitlement that you can use to purchase or build a home. However, this does not mean that you cannot get your entitlement back in order to purchase or build a second home.  If you want to utilize a VA home loan again, you will need to pay off the property that you purchased with your initial loan and still own that property. In addition, your entitlement can still be used if you have a remaining balance. For example, if you had an entitlement amount of $50,000 and only used half of it, you can still utilize the remainder to buy another property.  Property Limitations Another thing to keep in mind is that a VA home loan is only going to be available for certain types of property. For example, you cannot utilize a VA home loan to purchase a vacation home or secondary home for you or your relatives. The home must be used by for occupancy by you or your spouse. This is useful for active military personnel who want a house for retirement but are still going to be required transfer to new duty stations. In that situation, your spouse can occupy the home while you go to your new duty station. Eligibility Finally, you will want to keep in mind that there are a variety of eligibility requirements. For example, not every branch of service is eligible for one of these loans. In most cases, a member of the National Guard or the Reserves will not be eligible for a VA home loan unless their units were activated. While you are going to be eligible for a VA home loan as long as you are currently in the military, that eligibility will change when you leave the military. If you retire or are discharged, you will need to contact a VA home loan provider in order to determine if you are still eligible and for how long. In many cases, the type of discharge and the amount of time that you spent in the service will affect how long you remain eligible for a VA home loan once you leave the service. Contact a VA home loan specialist or lender today in order to discuss the many benefits provided by one of these loans. However, you will want to make sure that you keep in mind the eligibility requirements, entitlement limitations, and property limitations in order to make the applications as easy as possible for...

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Alternative Home Repair Loans for Borrowers Who Are “Upside Down” on Their Mortgages

Posted by on Nov 24, 2015 in Uncategorized | Comments Off on Alternative Home Repair Loans for Borrowers Who Are “Upside Down” on Their Mortgages

Some of the people hardest hit by the recent recession are those who received mortgage loans with high interest rates and then lost their jobs. Although the recovery has been painfully slow for most people who managed to keep their homes through programs like HAMP (Home Affordable Modification Program), many are faced with bigger challenges. These challenges come in the form of home repairs, which they cannot afford but need to complete. Otherwise their homes are a total loss due to water damage, fire/smoke damage, wind damage, and other structural and functional safety issues. If this sounds like your situation, there are more loans and financing programs that can help. Loan Programs for Home Repair from Home-Building Charities A recent addition to the services that home-building charities provide, homeowner’s renovation loans and project loans help current homeowners repair and care for their homes with no-interest to very-low-interest loans. The charities act as a cosigner on a loan with you, backing you when you need a loan that you cannot get yourself. In some cases you not only get a loan, but you may also be referred to a contractor to help you with the repairs on your home. Your City’s Community Renovation Project Many cities have a community renovation and refurbishment chapter in their city government. You will have to fill out a lengthy application and provide proof of income and proof of financial hardship. These programs may also require or request a credit check, since many of these programs also act as cosigners on home equity loans with the banks. If you do not have any equity in your house just yet, you can apply to other programs offered by your city’s housing authority, which may be able to help you complete repairs. Homelessness Prevention Programs There are also several homelessness prevention programs that provide nontraditional loans with affordable repayment terms. These loans help people who need to fix their homes or run the risk of becoming homeless. (Because structural issues, safety issues, and heating issues are all things that need to be repaired or the home is deemed “unlivable,” it can put many homeowners out of their homes and onto the streets or in homeless shelters even though, technically, they have a home.) This type of loan program is most effective for homeowners that have tried everything else and applied to everything else and have been denied on all accounts. To see what type of loan you might qualify for, speak with a representative from an establishment like Weyco Community Credit...

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Three Disadvantages Of VA Financing

Posted by on Oct 20, 2015 in Uncategorized | Comments Off on Three Disadvantages Of VA Financing

Assuming you qualify for a Veterans Administration loan, there are a few drawbacks to them. In general, these drawbacks are not significant enough to decide against VA financing nor will they make a regular commercial mortgage more attractive, but they should be kept in mind when getting a VA loan. There is a funding fee Most people who qualify for a VA loan are familiar with the advantage of not having to pay a down payment. Although this sounds great, people are caught off guard when they learn about the funding fee. This fee is only accessed one time, and is based upon a percentage of the selling price as well as your military category. The good news is that you can combine this fee with your financing, so you can still buy your house without any money upfront. There are also certain people who are eligible to have this funding fee waived. There are limits to the price of the house Depending upon the state and county you live in, there are limits to how much debt the government will guarantee. These limits are especially important for buyers who have no down payment. In addition, you need to keep in mind that these limits are based upon your income, asset to debt ratio and your credit. It is possible that the maximum financing amount you qualify for will be lower than the maximum allowed in your area. It is best to find out what the maximum price for a house will be for a VA loan for your personal finances and area before you begin to shop for your new house. Not every seller will accept VA financing This can be a problem when shopping for a house. Sometimes a seller will not want to bother with an offer with VA financing because of ignorance. Sellers think they are dealing with the government, when in fact, they are dealing with a private mortgage company that has guarantees from the federal government. However, it is true that the appraisal must be done by an agent approved by the government, and the appraisal may be lower than what the seller desires. Once this happens, a seller may turn down all offers with VA financing. Your best course of action is to make sure a real estate agent only shows you houses that will accept offers with VA financing. Also, keep in mind that the tighter the supply of houses is in your area, the more likely a seller will not bother with an offer tied to VA financing. As long as you keep the above disadvantages in mind, a VA loan is generally a good idea. If you qualify for this type of loan, it is because you or your loved one has earned it, and you should take advantage of this benefit. Get a free VA loan quote...

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