Home Loan Pre Qualification Vs Pre Approval Best Refinance Mortgage Rate Improve Your Odds Of Getting A Low Rate No Money Down Mortgage Large Increase In Mortgage Repossessions Glossary Of Common Terms Used During The Mortgage Process
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.
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.
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.
Obtaining a mortgage refinancing has several benefits. However, the only way to realize these benefits is to qualify for a low rate mortgage. Even though refinancing a home is ideal for securing a fixed rate mortgage, without acquiring a lower rate, you may not save on your monthly mortgage payment. If you are hoping to obtain a low rate mortgage, there are steps you should take.
Establish a Good Payment Record with Existing Mortgage Lender
When applying for a refinancing, the mortgage lender will carefully review your credit and assess your payment history with current mortgage lender. Individuals with a good payment record can expect a low rate on their refi – especially if their credit score is high. On the other hand, if you have poor credit, and have submitted several late mortgage payments, a refinance lender may consider you a risky applicant.
Risky applicants may have their refinance application denied. If the application is approved, the lender will likely remit an offer with a high interest rate. In this instance, refinancing is not very beneficial. The ultimate goal is to save money. However, if the savings are minimal, it is not worth the costs to refinance.
If you are contemplating a refinancing, attempt to submit all mortgage payments on time. Furthermore, reduce unnecessary debts, which may boost your credit rating. Homeowners with a good credit score have a better chance of securing a low rate refi.
Compare Various Refinance Mortgage Lenders
Making a side-by-side comparison of various mortgage lenders is very effective. After requesting a mortgage quote, lenders assess an applicant’s situation and make them an offer. Lender offers will vary. By comparing lenders, you have the power to select the loan package with the lowest refi rate. Those who neglect comparing lenders risk accepting a bad refinancing offer.
Refinance When the Time is Right
Because of declining mortgage rates, many homeowners are jumping on the refinance bandwagon. However, now may not be the right time to create a new mortgage. Prior to applying for a new mortgage, you should consider a few factors. How long do you plan on living in the home? Will a refinancing create a noticeable savings? What is your credit standing? Do you have the funds to pay closing costs?
Refinancing while rates are low is great for obtaining a low, fixed rate mortgage or lowering monthly payments. However, if your current rate is comparably low, or you anticipate a move in the near future, refinancing may not be the wisest choice.
No Money Down Mortgage – Get In Your Dream Home Today
No money down mortgage applications are on the rise as many consumers try to realize their dream of owning a home without having to put down a large down payment. In fact, many consumers who apply for a no money down mortgage actually do have the money for a down payment but they rather use that money to fix up, decorate or furnish their new home.
Only a few years ago the notion of mortgages with no money down was something out of a science fiction movie. As the home lending industry expanded and the types of packages available increased, no money down mortgages become more commonly known.
The way these loans work is they offer 100% financing for the home and can even include closing costs so you can buy a home without any out-of-pocket money. Of course, these loans will be contingent on the house appraising for the right amount of money, as well as some other factors.
No money down home loans can and do open the doors to many consumers that are looking to buy a home and have been unable to save for a down payment or are unwilling to put down a down payment.
Though loans that have no money down will typically be at a higher interest rate than loans with a down payment, many people find that these loans are still much more affordable or as affordable as the rents they were paying or would be paying.
Owning a home is a big step and it is typically the best financial decision a consumer will make – and often the largest. Buying a home and establishing roots can help many families, couples and singles begin to realize their other financial dreams and reach their goals.
Perhaps only 10 years ago people without money to put down on a home were probably living a fantasy if they thought they could get the financing they need to purchase a home – now that fantasy has become a reality with specialty lenders that help people buy homes with no money down, little money down and all different credit histories and employment histories.
The mortgage industry has changed dramatically in recent years and as a result many more people than ever before are able to realize their dreams and their goals by buying a home. One of the biggest changes in the industry has become the increasing availability of no money down home loans.
Recent statistics from the Department for Constitutional Affairs state that court actions by mortgage lenders rose to 28,476 in the second quarter of this year – for those that don’t follow such trends that’s up over 50% on one year ago. Also, at 18,330, the number of repossession orders was the highest for 9 years.
Although yet to reach the previous peak of around 40,000 repossessions in the second half of 1991, this is a very worrying trend for homeowners and landlords alike, who have got used to permanently rising prices and historically low interest rates and borrowed against ever increasing equity either to fund a higher quality lifestyle or to pay the deposits on further investment properties.
The massive house price inflation over the recent years gives lie to Gordon Brown’s boasts about his ‘low inflation’ economy. However the mock shock horror at the antics of yet another lying politician is of no importance. What is VERY important is the fact that it is consumer borrowing against this property price inflation that has kept the economy afloat. With house price inflation slowing, stopping, or going into reverse (depending on whose statistics you believe), people have nothing left to borrow against and are reaching their limits. Combined with the UK’s near total de-industrialisation and reliance on the service sector (which has little or no export value), this is going to have a serious negative effect on the economy in the near future.
So what does that mean for you the landlord? A sudden large-scale collapse in prices – as seen in the early nineties – seems unlikely to this author because there are still more people in need of housing than there are suitable and available properties; simple supply and demand economics – people will still need property to rent.
However if the economy takes a severe downturn, aside from other problems too complex to cover here, then a lot more people’s rent will have to be met by the government. As well as the obvious strain on the taxpayer, this is quite obviously bad news for those private landlords who refuse to take tenants who are claiming housing benefit. If you think about it, Housing Benefit is better than free property advertising in that there are a constant stream of takers and the cheques definitely do not bounce!
Those negative landlords are, as in every business, the ones that will find themselves being left behind the proactive landlords who have already opened their minds and embraced the income stream generated by tenants on Housing Benefit. Although there may be problems at the moment, the council is working very hard to overcome them and make the service all that it should be.
APR – This stands for Annual Percentage Rate. It enables you to compare the full cost of the mortgage. Rather than just being an interest rate, it includes up front and ongoing costs of taking out a mortgage. The formula for calculating APR is set by Government Regulations and therefore enables direct comparison of the cost of mortgages.
Capital and Interest Mortgage – This is when part of your monthly payment contributes to paying off the outstanding mortgage in addition to paying the interest on the mortgage. The payments are structured so that at the end of the term, your mortgage will have been completely paid off. For this reason this type of mortgage is also called a Repayment Mortgage.
Capped Rate – This is a mortgage where the lender agrees that the interest charged will never exceed a specific percentage. This deal lasts for a set period of years. After the set period, the rate usually reverts to the lenders standard variable rate. During the capped period, the interest charges can move up and down with the lenders interest rate – but cannot exceed the capped rate.
Cashback – An amount, either fixed or a percentage of a mortgage, which you can opt to receive when you complete your mortgage. The lender may well claw back this money through a higher interest rate.
CAT marks/standards – CAT stands for Fair Charges, Easy Access and decent Terms. They were created by the Government in an attempt to provide consumers with simple, clear financial products with straightforward, easy to understand terms. A CAT mortgage will have no arrangement fees, no redemption fees and will have interest calculated daily. It will also have a minimum loan of just.
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