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Buying your home is probably the most expensive purchase you will ever make and for this all you need is a mortgage loan to get started. However, with the current economic meltdown and the slump in the property market, it has become a little difficult for buyers to qualify for a home loan, especially if they have a past history of missed payments, and a bad credit score. Debtors with poor credit scores will be considered by most mortgage lenders to have been financially irresponsible and they would therefore feel hesitant about offering them a mortgage loan.
Nevertheless, there are a number of effective strategies that can help you secure a mortgage loan even with a poor credit score. All you have to do is to apply those strategies prudently. Once you qualify for a bad credit mortgage loan, also known as an adverse credit home loan you must make sure to keep a track of your mortgage payments in future.
Credit evaluation
Before you apply for a mortgage loan, make a complete assessment of your credit report. You can ask for your credit report from Experian, TransUnion and Equifax and once you have it you must check it thoroughly. If you spot any discrepancy on the credit report, immediately send it to the reporting bureau for rectification. If the credit bureau figures out some information has been wrongly reported in your credit report, it will remove the information and improve your FICO score eventually.
Down payment
People with bad credit might need to meet certain criteria to qualify for a home mortgage loan. A steady flow of income and at least paying 3 to 20% of the total purchase price upfront can help you convince potential mortgage lenders and secure the mortgage with lower rate of interest. Therefore, make sure you save as much as possible for a down payment on your mortgage loan.
Online lenders
If you are unable to locate any bad-credit mortgage lenders in your area, look for help from online lenders in this regard. Conduct a thorough search online and try to locate lenders offering bad credit home loans online. However, make sure you check with the Better Business Bureau that any online loan company is authentic and treats its customers fairly.
Cosigner
In order to convince any potential mortgage lender, to actualy make you a home loan, it can be useful to obtain the help of a cosigner. A cosigner will not only support your credit proposal but also increase your credit worthiness. Working with a cosigner with a high credit score, preferably 700 or higher, means that if you fail to cover your mortgage payments the cosigner will assist you pay your bills.
Applying the aforementioned strategies will make obtaining a bad credit mortgage loan much easier.
See also other mortgage tips :-
Nov
21
At a time when you may be considering a remortgage for your home The government in the UK has decided to step in to boost the housing market by helping first-time buyers get access to the property market and mortgages with a range of schemes that represent a $600 (£400M) million property initiative.
Build more homes
Not enough homes are being built for the demands of a growing population. In 2010-11, 121,200 new homes were built, a drop of 6% over 2009 the lowest number of houses built in peacetime since the 1920s.
The government therefore wants to help construction sites where work has stopped due to cash problems, but otherwise everything is ready to go. A new fund called ‘Get Britain Building’ will be established, developers can apply for funds. To get their hands on the money they will have to meet certain criteria, such as building a certain percent of affordable homes.
An extra $75 million will be added to the $150 million already set aside for refurbishing empty homes.
Underwriting mortgages
The most innovative part of the plans is the promise to underwrite a small percentage of home loans for new-build properties.
The government knows that one of the biggest problems first-time buyers face is getting the deposit. Figures from the Council of Mortgage Lenders suggest the average deposit required from first-time buyers is now more than the average annual salary i.e. more than $45,000.
The idea is that buyers will be able to borrow 95% of the property’s value, and the government and developers will underwrite some of the risk.
It’s good thing that the government understands that property is way too expensive which explains borrowers’ problems with getting deposits together.
But these measures will merely prop up buyer demand, meaning prices will stay at their current level or rise even higher. Not the answer to our problems.
The big winners are developers and lenders. For years lenders have been scpetical of the asking prices of new-build properties and have refused to lend at high loan-to-values on them, so developers find them hard to shift. The government scheme solves both of their problems but doesn’t really help borrowers.
See also Remortgaging Deals and What is HAMP ?
Nov
16
Strange as it may seem this is a great time to buy to let. Rents are at ridiculous heights 600 a month (900 $) for a room in somebody else’s house. The Council of Mortgage Lenders statistics show that both volume and value of buy-to-let loans have risen significantly.
In the third quarter of this year 34,500 buy-to-let mortgages were agreed, an increase of 16% on Q2, amounting to £3.8 bn, up 19% over the quarter.
This is its highest level in 3 years.
One estate agent described the sector as “red hot”.
The reason for all this activity in the rental mortgage sector is that demand just keeps on growing (could it be people can’t actually afford to buy a house or get a mortgage or home loan so they have no alternative?).
Over Q3 properties it took an average of just 13 days to rent a home, a new record.
Viewings are also up, by 17.8% compared to Q2. There are 5 tenants for every property on the market.
And surprise surprise rents are up again, at an average of £718 ($1100) in September, another record.
Demand for rental properties shows little sign of abating.
So if you’ve got some spare cash sloshing about or ifyou can get a mortgage or home loan then this is probably a good time to consider investing in property again, just don’t bite off more mortgage than you can chew otherwise you might just end up giving your money to the banks, which is hardly the aim of the exercise.
See also are reverse mortgages a good idea? and home affordable modification program
Sep
05
U.S. home loan rates have fallen to their lowest levels in 50 years, which has led to a lot of people considering remortgaging or refinancing their loans.
Officials at Freddie Mac reported that the average thirty year fixed rate averaged 4.15%, the lowest it’s been in over 50 years.
Freddie Mac’s chief economist Frank Nothaft said:
“It’s not surprising, many homeowners took advantage of this low mortgage rate environment and have already refinanced their loans…In addition, an increasing share of refinancing borrowers chose to shorten their loan terms during Q2 , according to Freddie Mac’s Quarterly Product Transition Report.”
Freddie Mac’s report also states:
-The 15-year fixed rate averaged 3.36%, a drop from 3.5% last week and 3.9% 1 year ago.
- Adjustable rates also fell : The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.08% this week, a fall from 3.13% last week and 3.56% one year ago.
-The 1-year Treasury-indexed adjustable rate was 2.86% this week, compared with 2.89% last week and 3.53% this time last year.
So all in all a good time to try and refinance your home loan. Although with Bernanke vowing to keep interest at the same rate until 2013, there is particular rush, except of course that the sooner you get it done the more money you will save.
Aug
16
Is it time to consider mortgage refinancing of your home loan? Mortgage applications soared 21.7% in the week ending August 5, says the Mortgage Bankers Association Market Composite Index. This was used in large part to a 30.4% jump in the group’s refinancing index.
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