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December 5, 2011

Ноw tо Qualify for Todays Low Ноmе Mortgage Interest Rates

Category: Home Loan Guidelines,Mortgage Lender Tips – admin – 8:28 am

Getting a low rate on your home mortgage loan seems paramount to being a homeowner, but the reality is that many qualified borrowers are paying a higher interest rate on their home loan than they should be.  Who does not want a low home loan interest rate? Of course all consumers want to obtain the best home mortgage rate, but most don’t know how to actually qualify for the lowest rates online. Today’s record low mortgage rates саn save you a substantial amount of money so consider mortgage refinancing if your interest rate is above 5%.  Think about it the home mortgage rate can have а serious impact tоwаrds thе cost оf уоur total hоmе loan. Тhrоughоut thе borrowing period, уоu аs homeowner must expect tо settle а sіgnіfісаnt amount оf money tо thе lending company аs thе interest fоr thе loan. Well, eventually, thіs іs thе mоst dominant aspect оf dоіng business аs thе lending company. Hоmе loan rates dо nоt hаvе tо bе as excessive as you think. Sure thе lending institution needs to make a profit but let the lender make their money from volume, not your specific home loan.

You will find whеn уоu аrе qualify fоr а hоmе mortgage loan уоu саn lock іntо оnе оf thе option оf low interest rates thе company offered. Υоu mау decide уоu wаnt а lower monthly payment аnd tаkе оut а 30 year mortgage wіth а great interest rate, оr уоu mау wаnt tо gо wіth higher payments оn а 15 оr 20 year loan. Еvеn wіth low mortgage interest rates mоst оf уоur monthly payment will gо tо pay thе interest оn thе loan, аnd а small amount will bе applied tо thе principal thаt уоu borrowed.

One оf thе factors tо pre-qualify fоr a residential loan іs lооk аt уоur credit rating оr credit history. Today is it is difficult to secure mortgages with bad credit, but with a a 10% down-payment or more, there are loan potential government loan programs available from the Federal Housing Administration.  Most first time home buyers start out with a FHA loan because they only require 3.5% down and FHA rates are great as well. However when a borrower has poor credit, FHA will often want ato see a higher down-payment to be considered as a compensating factor. Ѕhоuld уоur record іs clean thаn уоu hаvе nоthіng tо worry аbоut, hоwеvеr іf уоu hаvе аnу charge-offs, оr bills thаt gо thrоugh tо collection аnd officially reported tо thе credit bureau, thаn уоu hаvе nо choice thаt уоu nееd tо clean thаt mishap fіrst bеfоrе trу applying fоr а loan.

Another іmроrtаnt key factor thаt соuld gіvе you a better chance of qualifying for a low rate mortgage іs bу having ready а sizable dоwn payment in case your offer gets accepted. Оnе оf thе wау іs tо save money еасh month іs bу automatically deducted аn amount оf money frоm уоur paycheck іntо а dedicated savings account. А 20%down-payment іs considered a solid еnоugh fоr dоwn-payment for most mortgage lenders to extend you a loan approval. Wіth thіs money, thе lender will usе thеm tо secure thе loan wіth insurance, fоr аnу chance thаt уоu mау meet hard times аnd default оn уоur loan settlement. Ву documenting the ability to make a significant dоwn-payment уоu will be showing home loan lenders that you are a serious borrower who intends to repay the mortgage.

If buying а hоmе аt mortgage rates today іs sоmеthіng уоu wаnt tо dо, іt mау bе tо уоur advantage tо tаkе а lіttlе time аnd prepare. Ву dоіng уоur homework ahead оf time whіlе уоu аrе house shopping, уоu саn аlsо bе shopping fоr thе best аnd lowest mortgage package thаt уоu саn qualify fоr. Gо оn lіnе аnd check thе dіffеrеnt websites powered by competitive lending companies аnd of course you should compare and contrast the thеіr loan programs, product availability and rates оf interest.

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April 20, 2011

New Rules and Standards for Home Mortgage Loans

Category: Home Loan Guidelines,Published Articles – admin – 2:12 am

Before the housing bubble exploded, many home mortgage lenders and brokers were not operating with consumers’ best interest in mind.  They enabled and sometimes encouraged borrowers to take out mortgages with interest rates that shot upward after an introductory period even ones in which the principal balance rose over time. The Dodd-Frank mortgage reform bill passed last year aims to prevent these practices from coming back, mandating that lending companies ensure that all borrowers have the ability to pay back their home loans. As required by the Dodd-Frank law, the Federal Reserve on Tuesday proposed a set of minimum standards for home loans with no cost, creating an “ability-to-repay” requirement for most home loans, as part of an effort to make sure that U.S. lenders don’t return to the shady practices of the housing market boom.

Mortgage lenders would be able to meet that standard by verifying the consumer’s income or assets or making a “qualified mortgage” that requires the lender to calculate the maximum interest payment in the first five years. Home mortgages that meet that standard would have protections against lawsuits. They also would have restrictions on fees and would not allow the principal balance to grow.

The Fed also provided two more options for satisfying the “ability-to-repay” standard. Those affect lenders who are providing mortgage refinance loans with risky features and those in rural and other underserved areas. The Fed is seeking comments on the proposal by July 22. However, the central bank will not complete the process, as its authority over mortgage lending rules is scheduled to transfer to the new Consumer Financial Protection Bureau on July 21. At that point, the consumer bureau is charged with taking over the proposal.

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August 26, 2010

Credit Qualifications for Home Mortgages

Over 30% of US Consumers Do Not Qualify for Home Loans

Since the subprime home loan market crashed in 2006, lenders and banks have been tightening loan guidelines for refinance a purchase mortgages.

  • Credit scores need to be higher
  • Income needs to be greater
  • More equity is needed to refinance
  • More money is required for down-payments

Government loan products like the FHA and VA loan have emerged as the most flexible mortgage for borrowers who are struggling to qualify for a refinance loan. The FHA and VA streamline refinance have helped a lot of American homeowners refinance in a pinch. The FHA streamline does not allow borrowers to finance closing costs in the loan, so borrowers typically have to come out of pocket for lending costs like appraisal, title and escrow.

According to research from Deutsche Bank, the number of consumers in the United States with credit scores below 600 has increased to 26 percent from only 15 percent prior to the start of the recession.  This increase in bad credit scores could be attributed to late mortgage payments, credit card debt settlement or a bankruptcy.  Examining credit data further reveals that 9 percent of all U.S. consumers have a credit score in the 600-649 range.  Today most conventional and jumbo mortgage loan products require credit scores of at least 680.

Based on current loan guidelines and the credit score requirements for a home loan approval, any applicant with a score below 600 is almost certain to be turned down by a banking institution.  Borrowers in the 600-649 range are also considered “weak” candidates with a high turn down rate, especially if the credit score is below 620.

Based on the total number of Americans with a credit score of 649 or lower, up to 35 percent of all Americans are effectively locked out of the refinance or purchase mortgage market for the foreseeable future.  With foreclosures and default rates constantly increasing, it is conceivable that credit standards could be tightened even further by lending institutions.

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July 13, 2010

Comparing the Pre-Approval to the Pre-Qualification for Home Buying

Smart Home Financing posted a helpful article that compares the pre-approval to the pre-qualification.  Many first time home buyers find themselves confused when discussing their needs mortgage needs with a lender or broker.  The mortgage pre-approval is a written letter that includes a loan decision from the underwriting department after a borrower completes the residential loan application.  A pre-approval letter is a great negotiating tool for home buyers because it lends them credibility and helps the seller make a decision on their perspective offer.

Many first time home buyers prefer FHA mortgage loan options because these loans only require a 3.5% down-payment.  For homebuyers with a military background we recommend VA mortgage programs because they require no down-payment.  VA home financing is available up to 100% even for first time homebuyers.  Read the original article online at the Smart Home Financing Blog > Pre-Qualification Versus Pre Approval Letter

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February 1, 2010

Credit Standards Tighter in Loan Officer Survey

Bankers responding to the January 2010 Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices indicated that home loan standards are still contracting. The report also states that consumer demand for mortgage loans continues to decline.   The survey, released on Monday, addresses changes in loan supply and demand over the last three months.  Many people are looking for a mortgage with a low credit score. It also included three sets of special questions about delinquency rates of loans made to large and middle market firms, changes in bank policies about commercial real estate (CRE) loans over the past year, and a third set of questions about the banks’ outlook over the coming year for the credit quality of a number of categories of loans. 55 domestic banks and 23 U.S. branches and agencies of foreign banks responded to the questionnaire. Banks continued to tighten standards on residential lending, especially on nontraditional residential real estate loans. 17% of banks that make residential loans reported they had tightened standards on prime real estate loans and 30% reported such tightening of mortgage refinance products.

In addition, a moderate net fraction of banks reported weaker demand from prime borrowers for residential real estate loans. Demand from customers seeking nontraditional mortgages also weakened further over the survey period. Only a small net fraction of banks reported having tightened standards on revolving home equity lines of credit over the past three months, but a large net fraction of banks continued to report lower demand for such mortgage loans.

Demand for both businesses and households across all major categories of loans weakened on net over the past three months. 64% of respondents reported that business inquiries about new or increased credit had stayed about the same over the last three months while 13% reported an increase and 25% a decrease.  A large proportion of respondents reported that their banks were relatively unchanged in their approach to consumer lending.  Over 80% said that their banks policies were unchanged when it came to approving applications for installment, consumer, and credit card loans.  However, a substantial net fraction of banks said they had reduced credit limits on credit cards and had become less likely to issue cards to customers who do not meet credit scoring thresholds.

Respondents to the October 2009 survey had indicated that they would tighten many of their credit card policies as a reaction to passage of the Credit CARD Act.  Home loan terms were seen as being a little more in flux but the net percentages of respondents who tightened those requirements was lower than in the previous quarter. When considering lending to large firms – those with annual sales of $50 million or more 76 % reported there had been no change in the maximum home equity credit lines, 16% reported a tightening in the maximums and 7% said those terms had eased. Maximum maturity dates were unchanged in 83% of reports. Only 64% of respondents reported no change in the cost of credit lines while over 23% reported that these standards had tightened somewhat or considerably. Close to 26% reported that the spread charged to commercial borrowers had widened over the last three months compared to 58% that reported it unchanged. About 10% reported they had tightened collateral requirements, the remainder reported no change. Figures for lending to smaller companies varied only slightly from those reported for large firms. Read the original article at Mortgage News Daily

 

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January 8, 2010

New Mortgage Underwriting Guidelines and Credit Rules

Mortgage industry insiders continue to talk about the new underwriting guidelines and credit rules offering several new alternatives, but mortgage lenders are likely to extend consumers with notices including their credit scores, a bar graph allowing them to see where their scores rank against other consumers, the name and contact information for the credit bureau that provided the information, key factors that might have lowered the score, and guidance on how to correct mistakes in credit files. Most people know by now that bad credit bank loans are not easy to find anymore.

During the coming months, mortgage loan shoppers should ask competing lenders how they handle pricing when scores come in low. Ask whether the lender will inform you if something in your files is dragging down your scores and raising your fees and rates. We recommend that you request a free credit report in advance to submitting home loan applications. Start by visiting annualcreditreport.com and requesting a free credit report. It is more important than ever, because in 2010 because virtually all major mortgage sources including Fannie Mae and Freddie Mac have raised their credit-score cutoffs for the best rate quotes and lowest fees. > Go online  and read the complete credit repair article.

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