Mortgages Home Loans

starlight asked:


I am very disgusted w/how my home loan/mortgage is being taken care of and I know the name of the man to talk to but how do I go about getting an email addy for him? snail mail will take to long and it’s urgent I get in touch w/him. Phoning to is immposible to reach him..can’t get #.

DEXTER

Spring love asked:


We just got married and my credit score is 726 with $21,000 in debt, (mainly in car payments) My husbands score is 629 with $20,000 in debt (again in car payments and one credit card). Would it be easy for us to get a mortgage with these scores?

I know there are a lot of other details that factor in, we are just looking for suggestions! Thanks

JOHN

Brad Stroh asked:


Qualifying for a Mortgage

Before you buy a home, it is crucial that you weigh how you can afford to pay for it. You don’t want to waste time or money by bidding on a house that you cannot afford or by applying for a loan that is beyond your means to pay month after month and year after year. Figuring out your budget for your home will make it easier to get the right loan and also to know what changes you may need to make to your finances and to you credit profile.

As a standard rule you are advised to buy a house worth no more than 3 times your gross household income. Use this figure if you have some other debts, such as student loans, car payments, or sizable credit card balances. If you have no other debts, you likely can afford a house that costs as much as five times your annual household income.

When potential lenders review your ability to qualify you for a home loan, they are going to pay close attention to your debt-to-income ratio (DTI). To determine your DTI, start by computing your total net monthly income. This includes your monthly wages and any overtime, commissions or bonuses that are guaranteed; plus any pension monies or monies that come from alimony or child support, if applicable. If your income varies month-to-month, calculate your monthly average over the past two years. Don’t forget to include any other monies earned, whether from rentals or any other additional income.

To determine your monthly debt obligations, make sure to include all of your credit card bills, any loans, such as automobile, student, or personal and the amount of the new mortgage payment in the loan that you will apply for. Make sure to include your monthly rent payments if you rent. When you are adding up your credit card obligations, use the minimum required monthly payment. Divide your total monthly debt obligations by your total monthly income. This is your total debt-to-income ratio. The lower your DTI, the better. A high DTI can prevent you from getting the loan. It also can be a warning sign that even a loan that you qualify for could be a serious burden to make each month.

Most lenders traditionally will qualify your for the loan with a DTI of 28% to 44% of your monthly income. In other words, if your monthly income is $4,000, the lender would ordinarily want you to pay no more than $1,760 (.44 x $4,000) toward all your debts. Some sub-prime lenders will allow borrowers to have DTI ratios as high as 55%.

You may have compensating factors that will allow you to qualify for the loan, even with a less than desirable DTI. For instance, f you have an excellent credit record, a lender might allow you to go more deeply into debt. Just how high a DTI you can have and still qualify for the loan will depend on such factors as the amount of your down payment, the interest rate on your new mortgage, your credit history and score, and how much other debt you are carrying.

Bills.com has mortgage calculators that will help you quickly determine monthly payments on different size mortgages so you can learn how much house you can afford. All calculators are not created equal — but all of them are free. You should investigate different scenarios, so you can see how the amount of down payment, the length of the loan term, and the interest rates will affect the size of the monthly payment. (http://www.bills.com/mortgage/)

Before you start shopping for a loan and a home, you need to know some terms you will encounter:

Pre-qualification. Getting pre-qualified for a loan is a good thing, but it is NOT a guarantee that you will actually get the loan. To get pre-qualified, you will speak to a lender and go over the standard questions: your income (and DTI), your credit rating, and the size of your down payment. Prequalifying lets you determine exactly how much you’ll be able to borrow and how much you’ll need for a down payment and closing costs. Still, the lender is not asking to see the proof of your income claims, so any ‘approval’ you receive you can vanish into thin air.

Pre-approval. If you are serious about moving forward, it is recommended to get pre-approved for a specific loan amount. To get pre-approved, the lender will actually verify your credit and income documents, rather than relying on the numbers you provide them about your income and debts.

The documents that you will need to assemble for the lender to get your pre-approval are: Federal Income Tax Returns and W-2 forms for the past two years; the two most recent months’ pay stubs with your name and year-to-date earnings; proof of any other income you claim on your application, such as alimony, pensions or Social Security income; a list of all your creditors that shows the total balances due and the minimum required monthly payments, and proof of all assets, such as savings, stocks and bonds, or any other real estate owned.

Funds to be used for a down payment likely need to be in your account for two months before you can use them, IF they are coming from someone else, like your parents. Just having the funds in your account is NOT enough. Lenders will demand that any funds used to satisfy down payment and closing costs must come from your own resources. Funds must be ‘seasoned’ in your possession for at least two to three months. You can prove the funds are ‘seasoned’ by supplying two to three months of bank statements or documentation demonstrating that funds have been in your possession.

Almost every lender is going to ask to see the credit reports supplied by the three main credit bureaus: Experian, Equifax, and TransUnion. The credit report will show your financial history, showing the different transactions you have made, as well as providing your credit risk score. This score is known as the FICO score, named after Fair, Isaac, & Company, who developed many of the computer scoring models. It can be almost impossible to fully understand why your FICO scores is what it is, but key factors that are weighed in determining your score are: How timely you have paid your bills, how much debt you are carrying, how much of your available credit you are using (the size of the balance compared to the size of the credit line), how many credit cards and loans you have open, how many people have looked at your credit report recently, and if there is any negative information about in the public record area of your report. This area is where a judgment against you would appear as well as items like tax liens filed by the State or Federal Government.

The higher your credit score, the easier it will be for you to qualify for a loan. If you routinely pay your bills late, you will have a lower score, in which case a lender may either reject your loan application altogether or insist on a very large down payment or high interest rate. Because your credit history has such an important effect on the type and amount of mortgage loan you’ll be offered, make sure that you check your report regularly. If you find it necessary to clean up your report, you will want to do so before you apply for a mortgage. Almost every lender is going to ask to see the credit reports supplied by the three main credit bureaus reporting your file: Equifax, Experian, and TransUnion. The credit report will show a history of your financial transactions as well as providing your credit risk score. This score is known as the FICO score, named after Fair, Isaac & Company, who developed many of the computer scoring models. It can be almost impossible to fully understand why your FICO score is what it is, but key factors being weighed in the scoring are: How timely you have paid your bills, how much debt you are carrying, how much of your available credit you are using (the size of the balance compared to the size of the credit line), how many credit cards and loans you have open, how many people have looked at your credit report recently, and if there is any negative information about in the public record area of your report.

At the end of the day, if your mortgage and home fit into a well thought out financial game-plan, home ownership can be one of the most rewarding investments in your portfolio. Be sure to consider all of the issues, and make sure you get the right loan for your needs.



JULES

Jennifer asked:


If I recall correctly, a bank will only issue a loan for as much as a home is worth.

There’s a foreclosure in our neighborhood that no one touched while the seller had it on the market… honestly, it’s ugly - aluminum siding, brick veneer, and the layout of the house is odd, but we’ve decided we can make it work.

Anyway, since it didn’t sell, that owner had it seized by the bank. My husband and I want to make a low offer on it, and maybe get financed for an extra $20k in home improvements (even this would still put our loan quite a bit lower than the home’s appraisal value). Do banks do this? We’re qualified for FHA financing, but we can also put 10% down alternatively.

MARCOS

Teresa D asked:


We have 2 medical-related judgements and one from a credit card on our credit report. We spoke to a lender about buying a home and he said every mortgage companay would deny us because the people who have the judgements against us would put a lein on the property until they were paid. Is that true?

ETHAN

Kristin Gabriel asked:


Confusion among homeowners due to ineffective and complex mortgage disclosures resulted in a study by the Federal Trade Commission in which 800 percent of mortgage customers were given disclosure forms for an abstract loan. The message is loud and clear there is a need for easy to read and comprehensive mortgage terminology.

A Los Angeles Times article written on June 14th describes how most borrowers are perplexed by the complexity of mortgages. Kristof shows how most borrowers are perplexed by the complexity of mortgages due to an unsuccessful explaining of costs and the risks of home loans as well as a lack in the understanding of the terminology.

In a press release issued May 7, 2007 by the U.S. Department of Justice and the Federal Trade Commission (FTC) the purpose of the joint report, “Competition in the Real Estate Brokerage Industry,” is to inform consumers and others involved in the industry about important competition issues involving residential real estate, including the impact of the Internet, the competitive structure of the real estate brokerage industry, and obstacles to a more competitive environment.

In a complicated world that demands constant attention and offers an array of choices, the fact is, consumers prefer less choices and simplicity. A number of details lead to complexity and this can overwhelm consumers. It is all too common; the more choices we have the more we struggle to choose.

Have you ever heard of anybody complaining about the bundling of gas prices? What you don’t see is that the local state and federal government each gets one third or 33 percent of money in taxes, while the oil companies get ten percent and gas stations get five percent. As far as gas prices, where does the money go? Nobody cares.

Itemization of many of the details in mortgage disclosure documents often confuse people. Perhaps, a bigger problem is the deceptive tactics often used by the mortgage lenders to sell home loans to consumers as shown in the study.

Deception is also more of a problem than just confusion. New companies will resolve the confusion, including services where real estate agents and lending professionals can facilitate approval and processing of loans for customers faster.

Consumers should look for companies like this that provide a clear diagram of the program class loan amount, total down payment and closing costs, monthly payments, loan rate, APR, commission, and agent yield. Borrowers can identify the loan amount, the upfront cost of the loan, penalty amounts, the annual percentage rate, the amount of cash due at closing or the monthly payment, and if the payment included charges for property taxes and insurance.



JOHNATHAN

Rico asked:


i’m filing for chapter 7 also later on mortgage payments. We are planning to keep the house. I was wondering if I could get my home loan modified after the discharge.

RORY

Julian Lim asked:


Closing costs have a significant impact on the home loan rate that is paid when obtaining a new mortgage loan. Here are a few of the major closing costs and how they affect the home mortgage rates.

Closing Costs Affecting Home Mortgage Rates

First time home buyers or borrowers are often rather unpleasantly surprised at the time of closing or just prior when the good faith estimate of closing costs is received. These closing costs can sometime add a significant cost to the dollar amount that the borrower is expected to provide to clear the escrow account at the time of closing or shortly thereafter. The home loan rate is not directly tied to each of the closing costs, but indirectly, you will pay the closing costs. You should make sure you realize and understand each of these costs and how they impact your total cost of the loan.

Definitions

‘Closing costs’ is just one of the definitions that you should understand when considering obtaining a home loan. The ‘home loan rate’ is another. Closing costs are expenses related to the obtaining of the loan, such as document preparation, title search, appraisals, and various other expenses. These costs are typically listed as part of the closing process on the loan. The closing of the mortgage at the title company or with the loan officer will spell out each of these costs and who is responsible for payment of the cost at closing.

Title search

One of the responsibilities that must be met is a search by a title company of court records to insure that the ownership or title to the home in question is clear. They will be looking at sales and deed records to determine that the sellers actually have the legal authority to sell the property. There is a fee charged by the title company to conduct this search. The clear title means that the title company can guarantee the title is correct and that you will have a clear title to the property in question after closing. The title company actually provides a type of insurance, known as title insurance. The cost of the title insurance is one of the closing costs built into the home mortgage rates.

Origination fees

Another factor in the home loan rate is that of origination fees. These are costs associated with the work the lender or broker does in opening an application file and working to collect and pass on all the necessary documentation required to complete the loan according to the contract. These fees can be sizable or modest, depending upon the broker, but in most cases are negotiable also that fact is not commonly known.

Points

The borrower may be required to pay ‘points’ as part of the loan fees. There are two types of points that you may be asked to cover. Origination points are the fees you pay your broker or lender to secure the loan while discount points are essentially interest that you prepay in order to manage the best interest rates on your loan. Both types of points are usually paid at the home of closing. Payment of the discount points can significantly lower your home mortgage rates meaning thousands of dollars less in cost over the life of the loan.



ELISEO

Gufs99 asked:


My father would like to help us purchase our first home by co-signing on the loan for us. (yes, we both understand the implications of him being a co-signer on the mortgage). He is retired and living on his pension (not collecting SS just yet). Is this possible on a FHA mortgage?

RICKIE

Jonathan Drake asked:


Current home loan rates are rather low these days. This is mainly due to the fact that the number of people who are looking for loans are dramatically decreasing because of global recession that everyone is currently experiencing. And so, to be able to attract more loaners, mortgage lenders just opt to lower down their interest rates since this is a much better choice compared to that of having nothing at all.

Applying for home loans are the easiest and fastest way that one can take so as to have one’s dream house. With a lot of mortgage lenders out there whom all of which are willing to provide one with the necessary assistance that one needs upon purchasing a home, it is just a matter of choosing the right mortgage lender that can satisfy one’s need.  Then again the task of choosing the right mortgage lender is quite difficult. This is because there are a variety of loans that is present out there from a 15 years loan mortgage to 30 years, 40 years and even 50 years. There are also those whom offer either a fixed rate or an adjustable rate of interest. In fact, there are other options that one must choose from, and so with that, it is no wonder that choosing the right mortgage is quite a difficult task to do. Then again, with the proper knowledge and patience, one can be rewarded with the best home loan that one can use so as to be able to purchase one’s dream house.

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BURTON