Getting a Home Inspection

If you are in the process of purchasing a new home, it will definitely be in your best interest to have a home inspection done.
Not only will you want to have a home inspection done for your own sake, and peace of mind. But most lenders will require that you have a home inspection before they will proceed with the loan. The lending institution has just as much interest in the home as you do, so that is why they require a home inspection.
Getting a home inspection requires hiring a company to send out a home inspector to go through the home you are going to purchase. With you present, the home inspector goes through the home, and thoroughly inspects to make sure nothing in is need of major repair that cannot be seen with the naked eye.
Basically, a home inspector goes through a home and checks wiring, fixtures, plumbing, and the foundation of the home to make sure it is structurally sound. He will also inspect the outside of the home along with the roof to make sure there isn’t any exterior damage.
Along with the home inspection, it would also be in your best interest to inspect for wood boring insects, such as termites and beetles.
A pest inspection is also required by the lender before they proceed with a loan.
A pest inspection is done separately from the home inspection and is done through a different company that specializes in pest inspections.
Not only are home and pest inspections required by the lending institutions, but it would be in your best interest even if they were not. They cost anywhere from $300.00 to $400.00 depending on the size of the home, and you are aloud to be present and ask questions through the entire inspection.
Imagine if you found your dream home and loved it so much that you purchased it without having the home inspection done. On the day that you and your family move in, it is the happiest day of your lives. Than, three days after you move in, you get your first rain fall while in your new house. Than, the next thing you know, you have rain coming through the ceilings up stairs.
After something like this, you’ll be wishing you had the home inspected. Trust me.
Believe me, this stuff happens. So be smart, and get a home inspection. It beats paying $15,000.00 to $20,000.00 for a new roof.
In addition, once you have a home inspection done, you will have peace of mind that the house is sound and in good living condition. However, should anything happen to go wrong after you move in that was covered under your home inspection, you will have the home inspection company to hold accountable for the damage, and not have to pay it out of your own pocket.
To summarize, the home inspection is very important to both you and the lending institution. You both have an interest in the property, so have the home inspection done, you will sleep a lot easier.

Read More

Locating a Down Payment

Locating a Down Payment
If you are a saver, and many of you are, than the need to locate a down payment will not be an issue for you.
But there are also many of us out there that have not had the luxury to save as much as we would have liked for various reasons. With this challenge at hand, we will need to track down a source for a down payment.
If you have excellent credit, and when I say excellent, I mean your credit history is perfect without a blemish on it, you will most likely be able to apply for a mortgage with 100% financing, if you choose to go that route.
A lot of lenders offer this product, and if you can swing it, than you won’t need to come up with any cash for a down payment, and you will only be responsible for closing costs.
If you are unable to go with 100% financing, here are a few ideas you might look into to come up with a down payment.
Retirement Plans
If your employer offers a retirement plan such as a 401k, you might want to consider borrowing from it to help out with your down payment. Most 401k plans offer this option for home purchasing reasons. You do however have to pay this money back on a monthly basis.
The down side to using a 401k plan is that when you pay the loan back, you are doing it with after tax dollars.
With that being said, it is still worth looking into, and a lot of people consider this option.
Family
When all else fails, ask family members to give you a helping hand. This is not an uncommon practice among newlyweds who often approach their parents for assistance with their down payment.
If this is not for you, I understand. It can be tough to swallow your pride and approach family members to help you out.
Save
If you are at the end of your rope, and there doesn’t seem to be any down payment money in sight. You just might have to bight the bullet, start saving, and wait it out.
A great way to jump start your savings is with your tax return money. Depending on what your return is and what percentage the lender requires you to put down, your tax return could have you in the door sooner than you think.

Read More

What Are Subprime Mortgage Loans?

Subprime lending refers to the extension of credit to higher-risk borrowers, a practice also commonly referred to as "B/C" or "nonconforming" credit. Loans to subprime borrowers serve communities that may have been underserved by other lenders in the past. In recent years, subprime mortgage lending has grown dramatically, with over 90% of all subprime mortgage loans made in or after 1993. By the end of 1996, the total value of outstanding subprime mortgage loans exceeded $350 billion. In 1997 alone, subprime lenders originated over $125 billion in home equity loans. Subprime loans have become a significant and growing part of the home equity market. Subprime originations constituted 11.5% of the total home equity lending market in 1996; by the first half of 1997, they had grown to 15.5% of this market. At the same time, the composition of companies involved in the subprime market is evolving. One of the dramatic changes in this market has been the growth in subprime mortgage lending by large corporations that operate nationwide.

The subprime mortgage market has flourished because such lending has been profitable, demand from borrowers has increased, and secondary market opportunities are growing. Lenders typically price subprime loans to consumers at rates of interest and fees higher than conventional loans. Higher rates and points can be appropriate where greater credit risks are involved, as is often the case with subprime loans. Critics assert, however, that the interest rates and fees charged by some subprime lenders are excessive, and much higher than necessary to cover increased risks, particularly since these loans are secured by the value of a home. Some attribute lenders' high rates on first mortgages in part to federal deregulation of certain state interest rate ceilings in 1980.

The relatively high profit margins in the subprime mortgage industry have fueled demand in the secondary market from investors seeking higher-yielding securitized assets, especially in an environment of generally low interest rates. In 1996, the subprime mortgage sector issued over $38 billion in securities, the largest increase in securitizations for any lending industry sector in that year. The secondary market's expansion has, in turn, helped to sustain growth in the industry by enabling lenders to raise funds on the open market to expand their subprime lending activities. Freddie Mac, one of the primary government-sponsored enterprises involved in the purchase of mortgages, recently announced plans to enter the secondary market in subprime loans by purchasing significant numbers of "A minus" subprime mortgages by 1998 and the higher-risk "B and C" loans by 1999.

The market for subprime loans is expected to continue growing. Credit card delinquencies are rising and personal bankruptcies are at record levels, which negatively affect borrowers' credit histories, pushing more consumers into higher risk categories. Meanwhile, consumer spending continues to be strong. Together, these factors increase the market for subprime loans. In addition, more borrowers generally may be seeking home equity loans due to the change in the tax code limiting allowable interest deductions to those on a first mortgage.

Read More

Don’t Let Bad Credit Stop You

When I worked as a loan officer, it wasn’t unusual for me to come across people who thought they were out of luck because they had bad credit.

This is really not the case, although it is fair to say that you would not be able to walk down to your local bank, have a seat in the branch manager’s office and walk out with a mortgage.

However, there are alternatives, and you do have choices.

If you contact a broker, tell them your situation, be completely honest and up front with them, otherwise you are just wasting their time as well as your own, and believe me, whatever your situation may be, they have heard worse. Nine times out of ten they will be able to help you.

Conventional banks are not the only ones that lend money. Brokers have access too literally hundreds of banks with a wide variety of programs for people in unique situations from foreclosure buy outs, to 100% financing with poor credit scores.

I speak from experience, because when I was a loan officer I did mortgages for people in unique situations.

Foreclosure buy outs, bankruptcy, late payments on prior mortgages, the list goes on.

I would sit down with my customer, take down as much information as possible, than present their information to many different lenders for them to review. Most times I would find one with a program to help my customer.

Keep in mind, with unique situations, there is risk involved on the part of the bank, so you can’t expect to get the best rate in the world.  But if it is reasonable, and can put you into the situation you want to be in, than it is well worth it.

So if you think your credit, or a bad situation is preventing you from getting a loan, think again, there is probably a program out there for you, you have nothing too loose.

Read More

Finding a Mortgage Refinance Advisor

Finding a Mortgage Refinance Advisor

If you are looking to refinance your home for a lower rate, or you are interested in a refinance with cash out to do some home repairs, buy a new car, etc., you may want to consider finding a mortgage refinance advisor.

There are actually two ways you can go about refinancing your home. The first would be to do the shopping around for a refinance on your own. The second way would be to locate a mortgage refinance advisor.

A mortgage refinance advisor. Otherwise, known as a mortgage loan officer or mortgage broker are not at all hard to find.

The internet is perhaps the best resource for tracking down a mortgage refinance advisor. There are literally hundreds of them right in your own back yard, and the internet would be by far the best way to begin your search.

Once you have found a mortgage refinance advisor, don’t stop there, shop around. By shopping around with a few different loan officers and brokers, you will give yourself the ability to compare rates and prices.

Think of it the same way you would go about purchasing a new car. Shop around, test drive a few by going to different dealerships. Once you have test driven a few cars and compared pricing, base your decision on the best and most reasonable deal.

By shopping around as opposed to committing to the first mortgage refinance advisor you come across could mean the difference of thousands of dollars in closing costs and interest fees’ over the life of the loan.

By allowing no more than four loan officers or mortgage brokers to assess your situation, you are putting yourself in a much more ideal situation. Especially if your credit is challenged or your situation is unique, not only will the mortgage refinance advisors’ expertise come into play, you will be in a position to compare rates and pricing.

Remember, the majority of mortgage refinance advisors are paid on commission, so it is just as important to them as it is to you to get to the closing table. Good luck.

Read More

Refinancing with Home Equity Loans

If you have lived in your home for a reasonable amount of time, you may be considering refinancing.

Refinancing can be done in a few different ways. One of the most popular recently has been the home equity loan.

A home equity loan is a loan used to pay off your existing mortgage at a lower rate.

Also, when refinancing with a home equity loan, you have the option of liquidating some of the equity you have established in your home through monthly mortgage payments and appreciation.

Lets suppose you owe $125,000.00 on the mortgage to your home, but your home is worth $200,000.00. This means you have $75,000.00 worth of equity that you can liquidate.

Realistically, you could get a home equity loan for $150,000.00, pay off your existing mortgage, and have $25,000.00 left for home improvement, a new car, college tuition, etc.

Home equity loans also come in the form of a line of credit, better known as a home equity line of credit.

The difference between a home equity loan and line is that the line comes with a variable rate, which means it will adjust with the prime rate, so be careful when deciding.

The home equity credit line can also be re-tapped once it has been partially paid off, or paid off in full, which makes for much convenience.

Before deciding on how you want to go about doing your refinancing, be sure to educate yourself as much as possible about the mortgage industry.

Also, shop around for the best rate and program that fits your needs and budget. The mortgage industry is a competitive one, so let them fight for your business. Good luck.

Read More

How Lender's Set Mortgage Rates

Ever wonder how lender's come up with the rates they do? You can stop wondering, cause I'm going to tell you how. We all answer to a higher mortgage rate power, namely the secondary market. The secondary market is where Fannie Mae, Freddie Mac, and other mortgage lenders ply their trade. These government founded agencies purchase the loans that lenders make, then either hold them in their portfolios, or bundle them with other loans into mortgage-backed securities. Those securities are then sold to mutual funds, Wall Street firms, and other financial investors who trade them the same way they trade other securities and bonds.

As a result investors, rather than mortgage brokers and bankers, are in control of the rates. When economic news suggests the economy is heating up, investors demand higher yields from the lenders. This happens because they don't want to buy low yield bonds now, in case the Fed raises rates to cool the economy, which would mean they will make higher yield bonds later. The only way that lenders can get their loans sold in this situation is to raise the yields they offer investors. In turn, this drives the rates higher for consumers.

The same thing happens in reverse when it looks like the economy is cooling. Investors start clamoring for bonds, because they figure the Fed will have to cut interest rates in the future in order to get the economy going moving along again. If the investors wait, they'll end up with lower yielding bonds. Since investor demands are so strong, lenders who control loan supply can offer lower yields. The result is a lower rate for consumers.

To get the best rates out there, consumers really need to pay attention to financial news. Consulting with a mortgage lender or broker can also be very helpful. In most cases, the mortgage broker will be very knowledgeable and up to date on the economy.

Read More

Purchasing a Home with Bad Credit

If you would like to purchase a home but believe you are unable to because your credit has gone through some challenges, think again, there just may be some hope for you.

The mortgage industry is a very diverse one. And these days it is no longer a requirement to have perfect credit in order to purchase a home.

And no longer is it necessary to go down the street to your local bank in order to apply for a mortgage.

There are many lenders out there across the country known as wholesale lenders who specialize in different niches with specialty programs for people in all types of situations such as yourself.

The most important thing for you to do is to educate and familiarize yourself with the mortgage industry. This way you will have somewhat of an idea of what you are getting into, and a better understanding of what the people in the industry are talking about once you start to deal with them on a daily basis.

One thing you may want to consider is speaking with a broker if you are not comfortable finding a program for your needs on your own.

A broker is not a lender. They work as a liaison between the lender and the consumer. It is their job to find you a program to fit your needs and budget. They also will council and educate you through the entire mortgage process.

Remember, just because your credit is poor, it does not mean that you are at the mercy of the broker or the lender. Allow for a few of them to compete for your business, than base your decision on the one that best fits your needs and budget.

Read More