by: Chris Edison
Why do some people get their home loan mortgages approved in a breeze while others struggle through with hiccups? What are the differentiating factors between one application and another? What do lenders look at when they evaluate you?
In reality, getting your home mortgage approved depends on how your background matches the list of criteria set forth by the lender. Although these rules that they have are not always entirely hard and fast, the loan application officer does not stray too far away the guidelines he or she has been entrusted with. Needless to say, applicants should at best present themselves as creditworthy creditors and have the adequate documented records as proof of this.
Believe or not, lenders have a scoring system for aspects of your background that they are evaluating. The following are areas in which you will be scrutinized on:
1. Employment History
You must have been in employment for not less than 2 consecutive years within the same industry. This shows that you have the capability to be sustained in a permanent position, and do not hop from one job to another. Lenders look for stability and consistency as best they can, and your employment history is a good basis for them to evaluate your capability to generate income to finance your mortgage.
2. Credit History
The next indicator of your credit-worthiness is your short-term debt, a.k.a. your credit card bills. It's ok to have some debt on your credit card, but you must show a history of on-time payments. Apart from that, too much debt on credit cards with credit lines fully utilized shows the possible inability to pay for debt. Therefore, at least six months before applying for a loan, it would be best to clean up your short term debt as much as possible.
3. Outstanding Liabilities
The size of your income dictates the amount of liability you can support. As a rule of thumb, lenders stipulate that a person's total monthly payments for liabilities should not exceed 42% of his or her monthly earnings. With this, total liabilities include credit card debt, car loans, student loans, existing mortgages or child support collectively. This means that in order to qualify for your home loan mortgage, you need to reduce your monthly repayments on liabilities to the point which is acceptable by the lender.
4. Cash and Asset Reserves
Another aspect to show that you can afford your home loan mortgage is to provide proof to the lender on the amount of cash and liquid assets that you possess. The minimum reserves that you have must be sufficient to pay at least 2 months of monthly repayments for mortgage payments. Some lenders even go to the extent of requiring 6 months worth of reserves in order to qualify.
5. Existing Housing Repayments
Finally, if you already have existing housing rental payments, there should not be any late repayments for these within the past 12 months. This again shows your priorities as a responsible tenant and is adequate proof to the lender that you potentially will be a responsible borrower as well.
Some applicants who may lack supporting documents for their home loan mortgage applications should compensate by providing documents that will help to prove themselves to be responsible pay masters. These could be payments receipts of utility bills, phone bills or even car insurance, which are useful documents to be used to prove that you are indeed creditworthy.
About The Author
Chris Edison is a successful author and regular contributor to http://www.mortgage-traps.com a home mortgage loan information site, that reveals mortgage traps for home buyers.
Option One Mortgage Loans – Getting an Option ARM or Option One Mortgage Loan
by: Carrie Reeder
Have you heard about or been interested in finding out more about option one mortgage loans? They are becoming very popular, but its important to understand how they work before you apply for one. I will describe, in this article, an overview of the most common type of option ARM mortgage loan or option one mortgage loan.
How do they work? Option one mortgage loans are basically interest only mortgage loans, except that the first year, you pay only 1.25% of the interest on the loan. The remainder of the interest that is accruing is being added to the loan amount. The second year of the loan you pay more interest until gradually you are paying either full interest only payments or fully amortized payments (interest & principle). The reason the loans are called option loans is because every time you have a payment due, you have the option of paying the less than interest only portion, interest only or a fully amortized payment. This option would be good in a situation where your income is sporadic.
This mortgage loan type typically gives you 4 payment options in every bill.
Here are your typical monthly payment options:
Option #1 – Pay a 15-Year fully amortized payment amount (p&i)
Option #2 – Pay a 30-Year fully amortized payment amount (p&i)
Option #3 – Pay the interest-only portion of the loan (Interest Only)
Option #4 – Make a partial interest payment (1.25% - 1.95% depending on your loan type) and defer paying the additional interest to the total loan amount. (Deferred interest can be counteracted by making bi-monthly payments and by property appreciation)
This type of loan is good if you want to:
Wait a while to refinance again – If interest rates drop again, so does your payment. If you want to accelerate your payments and increase equity quick, pay more on your loan and it will be applied to future payments & will be directly applied to the principle balance. Will you want a 30-year loan? Keep the option to pay your loan as a 30-year, 15-year, or interest only payments.
Have an adjustable rate mortgage but want stability – This loan has a payment cap. The interest rate on this loan is based on the 12 month-MTA index, the most stable index of the 4 main indexes (COFI, LIBOR, MTA & CMT). This index is always below prime. The interest rate is based on the world economic markets which have been steadily coming down over the last 3 years. This loan has a 5-year fixed payment option as well.
Invest your payment savings in something else – This could open up opportunities for you if you could invest in real estate, the stock market or another investment when you use the extra $500-1000+ a month you free up from your property payment. Pay off debt with your payment savings – You can use the payment savings to pay off other debt.
Have security and options in your mortgage loan – The main benefit to this type of loan is the security of a mortgage payment that you control. You decide at any time what kind of a mortgage you want. If all goes well in your future, you have the freedom to pay your 30 year loan into a 15 year loan without even consulting another mortgage broker. Get more home for your money – You can qualify for more home with these low payment options.
Who Can Qualify? Qualifying for this loan is basically the same as any other loan, it is based on credit, equity & assets, if you are strong in 1 of these or 2 of these, you could probably qualify and with lowest rate possible.
What if I want to take out a stated income loan? “Stated Income” or “No income/assets” loans are possible with this Option One Loan.
These are just general guidelines and information about this type of loan. You will want to discuss all of these details with your broker or lender before you actually complete the loan. These factors may vary with each individual lender. Many lenders do not offer their customers this type of loan. If you are seeking an option one or option ARM loan, you will need to talk to your broker about it or find a broker that can do this type of loan. To see our recommended lenders for this type of loan. Visit here: www.abcloanguide.com/optiononeloans.shtml
About The Author
Written by Carrie Reeder, Owner of http://www.abcloanguide.com. Carrie's website is an informational mortgage loan website. Her website has articles and a list of recommended mortgage lenders for many different types of mortgage loans.
carrie@abcloanguide.com
Have you heard about or been interested in finding out more about option one mortgage loans? They are becoming very popular, but its important to understand how they work before you apply for one. I will describe, in this article, an overview of the most common type of option ARM mortgage loan or option one mortgage loan.
How do they work? Option one mortgage loans are basically interest only mortgage loans, except that the first year, you pay only 1.25% of the interest on the loan. The remainder of the interest that is accruing is being added to the loan amount. The second year of the loan you pay more interest until gradually you are paying either full interest only payments or fully amortized payments (interest & principle). The reason the loans are called option loans is because every time you have a payment due, you have the option of paying the less than interest only portion, interest only or a fully amortized payment. This option would be good in a situation where your income is sporadic.
This mortgage loan type typically gives you 4 payment options in every bill.
Here are your typical monthly payment options:
Option #1 – Pay a 15-Year fully amortized payment amount (p&i)
Option #2 – Pay a 30-Year fully amortized payment amount (p&i)
Option #3 – Pay the interest-only portion of the loan (Interest Only)
Option #4 – Make a partial interest payment (1.25% - 1.95% depending on your loan type) and defer paying the additional interest to the total loan amount. (Deferred interest can be counteracted by making bi-monthly payments and by property appreciation)
This type of loan is good if you want to:
Wait a while to refinance again – If interest rates drop again, so does your payment. If you want to accelerate your payments and increase equity quick, pay more on your loan and it will be applied to future payments & will be directly applied to the principle balance. Will you want a 30-year loan? Keep the option to pay your loan as a 30-year, 15-year, or interest only payments.
Have an adjustable rate mortgage but want stability – This loan has a payment cap. The interest rate on this loan is based on the 12 month-MTA index, the most stable index of the 4 main indexes (COFI, LIBOR, MTA & CMT). This index is always below prime. The interest rate is based on the world economic markets which have been steadily coming down over the last 3 years. This loan has a 5-year fixed payment option as well.
Invest your payment savings in something else – This could open up opportunities for you if you could invest in real estate, the stock market or another investment when you use the extra $500-1000+ a month you free up from your property payment. Pay off debt with your payment savings – You can use the payment savings to pay off other debt.
Have security and options in your mortgage loan – The main benefit to this type of loan is the security of a mortgage payment that you control. You decide at any time what kind of a mortgage you want. If all goes well in your future, you have the freedom to pay your 30 year loan into a 15 year loan without even consulting another mortgage broker. Get more home for your money – You can qualify for more home with these low payment options.
Who Can Qualify? Qualifying for this loan is basically the same as any other loan, it is based on credit, equity & assets, if you are strong in 1 of these or 2 of these, you could probably qualify and with lowest rate possible.
What if I want to take out a stated income loan? “Stated Income” or “No income/assets” loans are possible with this Option One Loan.
These are just general guidelines and information about this type of loan. You will want to discuss all of these details with your broker or lender before you actually complete the loan. These factors may vary with each individual lender. Many lenders do not offer their customers this type of loan. If you are seeking an option one or option ARM loan, you will need to talk to your broker about it or find a broker that can do this type of loan. To see our recommended lenders for this type of loan. Visit here: www.abcloanguide.com/optiononeloans.shtml
About The Author
Written by Carrie Reeder, Owner of http://www.abcloanguide.com. Carrie's website is an informational mortgage loan website. Her website has articles and a list of recommended mortgage lenders for many different types of mortgage loans.
carrie@abcloanguide.com
Poor Credit Home Loan – Get The Mortgage Loan You Want
by: Carrie Reeder
Having poor credit alone cannot hold you back from getting the home loan you want. Buying a home that is everything you want in a home, is a very exciting experience. The blemishes on your credit history will not alone keep you from getting the home you want and the home you deserve.
Here are some things to keep in mind when moving forward in the application process to get your home loan:
Contact or apply to many different lenders or brokers – Online you can fill out many mortgage applications where the lender or mortgage service company does not pull your credit history. If they don't ask for your social security number, they usually cannot pull your credit. Brokers usually use the initial application or inquiry form and what you tell them about your credit to make a decision about whether they should pursue the application and pull your credit or not. Many lenders will tell you that you are not going to get approved anywhere and that if they can’t help you, no one can. That is not true. All mortgage brokers have access to very different mortgage programs and some brokers are more creative in their financing techniques than others.
Fill out your application or inquiry as accurately as possible – Inflating your income on your application or inquiry form, to be higher than you know you can verify your income to be, will only delay the process of getting pre-approved. The broker will work the fastest for you if he/she is working with the exact information he/she needs to be able to verify. That’s the best way to get approved and through the pre-approval process smoothly.
Be persistent – This is the key when seeking a mortgage loan pre-approval with poor credit, be optimistic. Look for creative ways to get financing and contact as many brokers as possible. There is one or more out there that can help you. The key is to find them.
Start house hunting - Sometimes the key to getting into a house is finding the right one and a seller that is flexible enough to help you do some creative financing work. For example: the seller carrying back a small percentage of the loan, the seller paying your closing costs or you being able to purchase the house for significantly lower than market value.
To view a list of our recommended poor credit mortgage lenders, visit this page: www.abcloanguide.com/lessthanperfectcredit.shtml.
About The Author
Written by Carrie Reeder, Owner of www.abcloanguide.com. Carrie's website is an informational mortgage loan website. Her website has articles and a list of recommended mortgage lenders for many different types of mortgage loans.
carrie@abcloanguide.com
Having poor credit alone cannot hold you back from getting the home loan you want. Buying a home that is everything you want in a home, is a very exciting experience. The blemishes on your credit history will not alone keep you from getting the home you want and the home you deserve.
Here are some things to keep in mind when moving forward in the application process to get your home loan:
Contact or apply to many different lenders or brokers – Online you can fill out many mortgage applications where the lender or mortgage service company does not pull your credit history. If they don't ask for your social security number, they usually cannot pull your credit. Brokers usually use the initial application or inquiry form and what you tell them about your credit to make a decision about whether they should pursue the application and pull your credit or not. Many lenders will tell you that you are not going to get approved anywhere and that if they can’t help you, no one can. That is not true. All mortgage brokers have access to very different mortgage programs and some brokers are more creative in their financing techniques than others.
Fill out your application or inquiry as accurately as possible – Inflating your income on your application or inquiry form, to be higher than you know you can verify your income to be, will only delay the process of getting pre-approved. The broker will work the fastest for you if he/she is working with the exact information he/she needs to be able to verify. That’s the best way to get approved and through the pre-approval process smoothly.
Be persistent – This is the key when seeking a mortgage loan pre-approval with poor credit, be optimistic. Look for creative ways to get financing and contact as many brokers as possible. There is one or more out there that can help you. The key is to find them.
Start house hunting - Sometimes the key to getting into a house is finding the right one and a seller that is flexible enough to help you do some creative financing work. For example: the seller carrying back a small percentage of the loan, the seller paying your closing costs or you being able to purchase the house for significantly lower than market value.
To view a list of our recommended poor credit mortgage lenders, visit this page: www.abcloanguide.com/lessthanperfectcredit.shtml.
About The Author
Written by Carrie Reeder, Owner of www.abcloanguide.com. Carrie's website is an informational mortgage loan website. Her website has articles and a list of recommended mortgage lenders for many different types of mortgage loans.
carrie@abcloanguide.com
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