Bad Credit Mortgages Refinancing Costs What To Expect Mortgage Interest Rate Analysis Choosing The Home Loan Lender Type For You Home Loan Pre Qualification Vs Pre Approval

So you’ve gotten a little behind on your credit card payments. Ok, you’ve been late on your car a few times too. And, there are some other issues on your credit that makes it less than perfect.

No matter if you’ve lost your job, had medical problems, or any other reason, you’re credit score doesn’t care. But, just because your score is a little lower than most peoples, don’t worry. There is always a lender out there who is willing to help you find a mortgage so you can own your own home.

Don’t fret if you have been turned down by traditional lenders for a home loan. All you need to do is to search a little more for a lender who specializes in mortgages for people who have less than perfect credit. One easy way to do this is on the Internet. Just make sure that you put ‘imperfect credit’ in the search box and you will come up with thousands of companies who are just waiting to offer you that mortgage for a home of your own.

The companies who specialize in bad credit mortgages are usually trained in how to help people gain a mortgage with those blemishes. You might have to pay up some of your past due bills, or pay off some of the smaller ones, before they can lend you the money, but rest assured, they will always try their hardest to get you a good rate on a mortgage. Their brokers and advisors will always know the best way to get you financed and the best rates that they can get for you.

Not only can these mortgage companies help to get you into a home of your own, they can also help you to repair your credit. By opening a new mortgage, you will start a whole new line of credit that can boost your credit score tremendously. Make sure that you pay your payments on time, and you will see your credit score rise a bit more each month or so. This can help you on getting a new car, applying for a credit card, and in many other areas of your life – it can even help you get a lower rate on your insurance!

So, no matter how low your credit score is, you can always search a little bit and find a mortgage lender that is willing to work with and help you find a mortgage to get you into a home. Before you start searching for a mortgage, it is always a good idea to know what your credit score is. This will help you in your search for the right mortgage company for you, and help the mortgage company to know just where to start on finding you the right loan. Just don’t get discouraged when you see your credit score and start to think that no one can help you. There is always a mortgage broker out there who can work miracles!

Refinancing your current mortgage is a wise financial decision if you can recoup the costs of a refi. An average refinancing deal, you can expect to pay between two and six percent of the loan amount if fees and points. On average if you can lower your interest rate by two points, then you will usually come out ahead in the end.

Normal Mortgage Costs

Refinancing your home is just like taking out your mortgage the first time. All the loan costs you paid for your original mortgage, you will have to pay again. Usually these had up to $2000 in fees plus at least one point. Fees will be included for application, appraisal, survey, attorney review, and title search.

Besides the loan origination fee of 1%, you can also expect to pay a couple of points for lower rates. Points are flexible though. You can choose to pay no points for a higher rate, or a couple of points for lower rates. Base your decision on how cost effective points would be. Using an online mortgage calculator can help you figure the costs and savings of each option.

Extra Fees For Refinancing

Besides regular mortgage fees, you may get stung on a prepayment penalty or private mortgage insurance. Prepayment fees are prohibited on federally back loans, such as FHA or VA mortgages. Some states also limit prepayment fees. Check your current mortgage before deciding to refinance.

You may also be hit by private mortgage insurance (PMI) if you decide to take out your equity. This can add up to several hundred dollars a year. But if you have a government backed loan, you don’t have to worry about this issue.

How To Decide

When you are trying to decide on whether to refinance or not, take a look at your loan and home goals. If you plan to stay in the home for several years, then you have the time to recoup costs.

You can also request quotes from mortgage lenders to see what kind of deal you can get. With no commitment on your part, you can take a look at rates and points that are being offered.

In the very beginning of the month of August the mortgage interest rates remained quite stable. Except a few mortgage program interest rates most of then remained unchanged to what it was in the last week of July. Interest rates of mortgage programs like 10-Year Treasury and 30-Year Treasury were down by 0.06% and 0.04% respectively. And the interest rate of programs like USD LIBOR 6-month and USD LIBOR 1 Year were up by very nominal 0.015% and 0.022%. Other than these, the interest rates of 30 year fixed average, 15 year fixed average, 5/1 ARM average, 3/1 ARM average and some other programs remained unchanged.

On the third day of the month most of the mortgage interest rates fell down by units in decimal due to change in market conditions. But the interest of short-term mortgage loans like USD LIBOR 6-month and 1-year were raised up to 5.318% and 5.230%.

During the first 15 days of the month the mortgage interest rate fluctuated a lot. Though the average fluctuation rate was very low but it kept on fluctuating up and down. On most of the occasions the short-term loan interests got affected and kept changing everyday.

Analysts believe that the decline in the mortgage industry is due to the higher unemployment in the recent times. Some believe that the recent drastic drop in mortgage market is due to the tighter lending standards and cooling home prices. This fall in the mortgage interest rate has in fact started to affect the sub-prime lending too.

Due to the fall in mortgage interest rates the U.S. mortgage applications rose for the second straight week. Experts believe that the recent disturbance in the mortgage market is the reason behind the rising applications. The housing sector and the homebuilders market are down and so are the financial companies including mortgage companies. Last week, the fall in the mortgage market spread to the financial markets with a rapid speed and provoked the fear that tighter credit will have a bigger impact on consumers, markets and the economy.

It has been forecasted that the interest rates for the 80% of homeowners and buyers that qualify for A-paper mortgages will probably remain stable or slightly increase in the near future. Those who are with sub-prime credit or don’t have proper documents to prove income, may face difficulty in getting the loans or they might be charged with higher interest rates or huge down payment.

There are a multitude of different lender types in the housing market and before refinancing or borrowing it pays to know who’s who. Each option has it’s pluses and minuses it comes down to choosing the person or institution that suits your needs and who you feel comfortable with. Here’s a brief intro:

Mortgage Brokers

Mortgage brokers are responsible for introducing borrowers to lenders – they act as an intermediary offering prospective borrowers information on various lending institutions and their products. With the various types of lending institutions available, not to mention the vast array of products on offer, the borrower has various options and choices. The task of the mortgage broker is to determine the most suitable loan for the borrower. While the broking service is often free, a small fee may be charged, and the broker will generally receive commission from the lender they recommend.

Mortgage Managers

Mortgage managers are lending specialists who arrange funding for home and investment loans. Unlike banks,building societies and credit unions, mortgage managers do not have a base of customer deposits with which to fund their loans instead they source their funds via a process known as securitisation. This is a process whereby assets with an income stream are pooled and converted into saleable securities. The mortgage managers job is to set up the loan and perform a liaison role with all parties involved, namely originators, trustees, credit assessors and borrowers. They provide the customer service role and are there to manage your loan throughout its term.

Credit Unions

A credit union is a cooperative that is owned and controlled by the people who use its services. Each member is both a customer and a shareholder in the credit union.Deposits from members are used to fund loans to other members, with the credit union business structure facilitating the process. Credit unions serve people who share a mutual interest, such as where they work, live, or go to church. Credit unions are non profit organisations, and because there are no external shareholders there is no pressure to earn profits at the expense of customers. Like banks, they offer a wide variety of banking facilities such as loans, deposits and financial planning. Credit unions main function is to serve members needs rather than make a profit. They therefore put a great deal of emphasis on customer service and meeting the needs of members.

Building Societies

Building societies operate in the same manner as banks and obtain their funding primarily through customer deposits. As with credit unions, customers are members. In a sense they own the society, which is why they are often referred to as mutual societies.

In Australia banks are regulated by the Reserve Bank. Banks are the original lending institutions and for the most part they source their funds through customers term deposits and savings deposits via their branch networks. Customers are paid interest on deposited funds and these funds are then available to lend to borrowers. In turn, these borrowers pay interest to the bank on the sum lent. The margin between interest paid on deposits and interest received from loans provides banks with their major source of revenue. A downside of Banks is that Banks generally have a large network of branches supported by many staff members involved in the day to day operation of taking deposits and lending funds. Much of the banks profits are swallowed up in the maintenance of their branch structures, whereas various other types of lenders don’t have such hefty overheads.

Once you’ve decided to buy a property, the first step is not to go house hunting. Instead, you should find out what you can borrow. In doing so, it is important to understand the difference between loan qualification and approval.

Pre-Qualified

Getting pre-qualified for a home loan carries little if any weight when it comes to actually getting the loan issued. Let’s take a look at why.

Its time to buy your first home and you’ve done the research. The first step is to find out how much you can borrow. Down to the bank you go for a sit down with a friendly home loan officer. This person asks you questions about finances, salaries, credit and so forth. You might even be asked to fill out a short questionnaire. After a surprisingly short time, the bank officer suggests a loan amount of around $300,000 is probable. Being really helpful, the bank officer even prints out a form letter with your name and the pre-qualification amount of $300,000. Wow, that was easy…perhaps to easy?

The problem with pre-qualifications is they are based on best guesses. The bank officer looks at no hard facts. When it comes time to actually apply for the loan, you can be assured the lending institution isn’t going to be willing to guess. In fact, you might be told you don’t qualify for a $300,000 home loan when push comes to shove. You might only qualify for $250,000. In nightmare situations, you might not qualify at all because of credit problems. In short, home loan pre-qualification is a waste of time for the most part.

Pre-Approval

Getting pre-APPROVED for a home loan is definitely your best option. Getting pre-approved for a home loan is an excellent strategy because you actually go through the process. Issues such as income, credit scores, personal wealth and so on are resolved. At the end of the process, the bank agrees to issue a loan up to a certain amount contingent on an appraisal of the home you eventually decide to buy. The lender will produce a letter indicating as much, and it is a very valuable letter.

A pre-approval letter is instant gold in the real estate market. If you were selling a home, would you prefer a buyer with a pre-approval letter or one without? The answer is obvious and leads to another advantage. In the current market, it is likely you will be bidding against other parties for property. A seller is much more likely to select your bid because they know the loan process will go smoothly. This can make all the difference when it comes to closing a deal.

Determining how much money you can borrow is the first step in the purchase process. Just make sure you get a pre-approval letter, not pre-qualification guesses.

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