Bad Credit Loans Are Available

You may not spend a lot of time thinking about your credit score but if you have a bad credit rating, you may find that it is difficult to obtain what you are looking for in life. Credit is an integral part in modern life but if you have misused credit in the past or you have made bad financial decisions, you’ll find that your ability to obtain credit in the future becomes very difficult.

If you have a bad credit score and you are looking to obtain credit, you need to accept that many lenders or businesses will not provide you with what you are looking for. You need to look for bad credit options, and thankfully, there are options available to you.

Advantages of Bad Credit Loans

The obvious advantage of a bad credit loan is that it is a loan aimed specifically at people who may not get a loan in another way. Banks and traditional lenders are clamping down on the amount of loans that they provide and the first way that banks evaluate whether someone is suitable for a loan relates to their credit score. You may have the funds to pay off a loan now but if your credit score is poor, perhaps caused by actions in the past, you will struggle to obtain the funding that you need.

bad credit loan word
bad credit loan

Types of Bad Credit Loans

When it comes to bad credit loans, you will often find that the options available to you come under secured or unsecured loans.

Secured loans are where the borrower pledges an asset or property as collateral to the lender in order to receive the loan. The presence of this collateral allows the lender the confidence to provide the loan at an affordable rate of APR. An example of a secured loan available to people with bad credit would be a logbook loan. This is a loan where the applicant places their car as collateral to the lender. This allows for a lower level of interest to be applied to the loan but if the borrower fails to make payments, the lender can take the car.

Unsecured loans are where there is no security or asset being placed as collateral for the loan, and even if the borrower fails to make payments, the lender is unable to claim any of the property owned by the borrower. The absence of any collateral means that the lender is looking to place a higher rate of APR on to the loan. Examples of unsecured guarantor loans include payday loans and guarantor loans.

Given that the secured loan comes with a more affordable rate of APR, you would assume that they are the most attractive or positive loans, but this isn’t the case. This is because the risk of losing a home or car is a very real and major risk, something which many people would prefer to avoid. There is also the fact that many people with bad credit do not have a car or a home that they can offer as collateral. This means that the only option left for many people is an unsecured loan, and this means that many people are left with the prospect of paying a higher degree of interest for their loan.

A guarantor loan is a viable option

One exception to this rule comes with a guarantor loan. A guarantor loan is an unsecured loan but the presence of the guarantor helps to lower the associated APR. While the borrower has a bad credit rating, the guarantor is expected to have a positive credit score. The positive credit score of the guarantor is the factor that allows the lender to provide a loan at a more affordable rate of interest.

If you find someone that is willing to act as a guarantor for you, you should find that paying off the loan is a simpler process. Acting as a guarantor is a big responsibility, so it is important that you go over the details of the loan, and your finances, with the guarantor. Many people will feel unsure or uncertain about talking about their finances but given that a great deal of responsibility is being placed on to the guarantor, you need to provide them with as much information as is required.

Andrew Reilly is a freelance writer with a focus on news stories and consumer interest articles. He has been writing professionally for 9 years but has been writing for as long as he can care to remember. When Andrew isn’t sat behind a laptop or researching a story, he will be found watching a gig or a game of football.

Top 10 Risks of Reverse Mortgage

Mortgage? Reverse mortgage? Direct Reverse Mortgage? Name it and we will hand it to you in a silver platter. Yes, the business of loans in the Philippines is evidently taking the center stage now.  For instance, reverse mortgage loan seems to be the perfect solution for a retiree with low monthly income, but take time to scrutinize this mortgage type of loan because you can easily see that it is not what it appears to be. For the elders, who usually have their houses as their only property, reverse mortgage loan is the solution. Reverse mortgage is one of the many types of loans in the Philippines that allow homeowners to borrow money from lending companies giving their houses as the collateral for the loan. In order to properly weigh in, whether to apply for a mortgage or not kindly check the several risks of reverse mortgages below.

Home loan burden
Home loan burden

Imagine how literally risky it is to carry your house at your back because of your reverse mortgage application and all those hidden and upfront costs.

Family Instability Issues when the Borrower Dies. When the borrower dies, the family can either continue living on that house still under a reverse mortgage loan or can pay for the accumulated mortgage by selling the house. The risk is the amount of the house may be lesser or just enough to pay for the mortgage that nothing may be left for the family of the borrower.

Fees. The scenario here is that, the lending company lends you a specific amount of money monthly based on the computed home equity. The real thing is this: while you are in a reverse mortgage, you will still spend on the maintenance of the house, property tax and home insurance. That’s a lot of money spent there from a loan intended to aid your monthly income.

Interest Rates. The interest rates of reverse mortgage loans are way much higher than any of the equity loans in the Philippines. Its upfront costs can increase immediately.

Variable Rates. The rates of reverse mortgage loans in the Philippines are directly affected by its economic status; thus, time will come that your mortgage rate is higher than the usual.

Exceeding the Equity Loan. There will be no more monthly money for you when you have reached the established home equity amount. You have no choice but to sell the house to pay for the mortgage.

Misdirected Mortgage Loans.  A borrower applies for the loan in order to have enough funds during retirement. However, instead of gaining favors, the borrower will be bombarded with a lot of interest rates from the loan like insurance premiums and services fees.

More Complicated and Expensive. Considering the fees incurred before, during and after the reverse mortgage transaction, it appears that it is way too expensive for someone, especially to a retiree looking for something to augment monthly income.

Low Estate Value. Because you already spent your home equity, naturally your estate value deteriorates.

Loan Processing Fee. The lender can actually charge of a loan processing fee and that could mean an additional cost for a borrower like you. It is not going to be a small amount because it actually depends on the lender and the value of your home.

Fixed Loan Terms. In the latter part of the reverse mortgage loans, you realize to add for another borrower or lower the interest rate for your convenience. That is a big no because most lenders do not allow such arrangements.

Now is your only time to decide. Is reverse mortgage loans the answer to your problem or is it another problem coming to your way?

Maricor Bunal
Maricor Bunal has been a Project Manager and Content Writer for a long while. Her passion in writing is her main drive in crafting articles that are engaging, informative, and meaningful. Her partnership with Loan Solutions PH has given her a whole new opportunity to take writing to a whole new level.

Obtain A Mortgage Loan Or Find Homes For Sale

Do you want to buy your own home? Are you falling short of cash? If yes, then you need to know that there are several mortgage loans with which you can get money and accomplish your ultimate home. While mortgage loans help you purchase your dream abode, there are also homes for sale in the market that you can get at a cheap price. Make sure you know about the loan market well and buy the perfect house that will fulfill your requirement.

home for sale
home for sale

Mortgage loan – Why do you need to take out one?

If you have decided to stop paying rent to your landlord every month and want something of your own, then buying your own home is definitely a wonderful idea. However, the major problem that arises is you may not have sufficient cash available for them. Thus, you fall into the category of those homeowners who have the desire to build their own house but have to step back due to lack of fund. Taking out a mortgage loan will serve your purpose of buying your home or building a new one where you can live safely with your loved ones.

Homes for sale – Why is it wise enough to buy them?

Like other people, you must also have to dream of purchasing your own house. But, you either lack sufficient money or aren’t able to contact the appropriate homeowner who will offer you the right home according to your choice. There are homes for sale in the market that the home owners want to sell off. They do so because they are either not satisfied with their present house or thinking to buy a new one. You may take the most advantage of this situation by buying one from them. Other than this, these homes are usually less expensive in price in comparison to the ones that the lenders may show you. This is because the owners of these homes want to get rid of their home by selling them off to the potential customer.

So, if you are thinking to secure the lives of your loved ones, make sure you buy your own home. Not everyone can fulfill their dream of purchasing home. However, if you are lucky enough, you will surely be able to take out a loan and buy home. Also, with the available of various homes for sale, you can get a house that you have always dreamt of.

Mortgage Modification: Get Debt Relief And Undo Credit Score Damage

You can avoid losing your home over foreclosure by opting for the government mortgage modification programs. These programs are administered by the U.S. Department of Housing and Urban Development (HUD). One of the federal mortgage debt relief programs is known as Home Affordable Modification Plan (HAMP).

What is HAMP?

The federal mortgage loan modification program has been devised by the Obama Administration such that a struggling mortgage borrower will only be required to pay 31% of his/her monthly gross income. Primarily, HAMP has the following advantages:

– Extends the maturity deadline of the mortgage loans.
– Reduces the rate of interest on them.
– Cuts down the principal loan amount.

mortgage modification
mortgage modification

How to qualify for HAMP

You can use various online mortgage modification tools in order to find out whether or not you’ll qualify for the HAMP or any other mortgage debt relief programs. However, you can check out the below mentioned list in order to know about the HAMP’s eligibility criteria:

– The first mortgage loan should have been taken before 1st January, 2009.
– The lender should be wiling to work and participate in the HAMP program.
– Monthly mortgage payment of the borrowers must be more than 31% of their gross monthly income.
– The house should be the principal home of residence of the distressed borrowers.
– The total outstanding balance should not be in excess of $729,750 for single unit properties. However, this cap is higher in case of 2-4 unit properties.
– Borrower is unable to stay current with his/her mortgage payments.

How to apply for HAMP?

Here is a 3-step guide to apply for a HAMP:

As soon as you realize that you won’t be able to keep up with the monthly payment, act at once in order to resolve the issue before it is too late. You must gather all your financial information like present monthly income and expenses before applying.

Find out all the details about your mortgage, loan agreement terms and the lender.

Once you’ve completed the above steps, you may get in touch with a HUD-approved housing counselor for some free advice and to know about the various other debt relief alternatives, besides the HAMP.

Mortgage modification and credit score damage

Many a times, it has been found that due to lack of proper co-ordination between the borrowers and the lenders, it is the credit rating of the borrowers that suffer the most. This is because most of the times banks ask their borrowers to stop making the monthly payments.

This skipped monthly payments starts to show up in the credit report, thereby resulting in a damaged credit score. The notion that plays out here is that if borrowers keep making the monthly payments, then it confirms that they are not undergoing any kind of financial hardships.

However, borrowers can improve their credit score as well as credit rating by making timely mortgage payments or for that matter any loan repayments. Moreover, they need to avoid making too many hard enquiries within a short span of time.

Should I use a Commercial Mortgage Broker?

During the course of business, there will come a time when you need to raise funds for business expansion, or to meet financial obligations. That is the time when most business owners turn to commercial mortgage.

Whether you are applying for commercial mortgage for the first time or the n-th time, the process and paper work can be taxing. There are two choices. Either you can do all the documentation by yourself or hand over the work to a professional commercial mortgage broker.

This article explores the benefits of hiring a professional broker as opposed to doing the task yourself.

mortgage broker

Broker – A Helping Hand!

Apart from savings time, a commercial mortgage broker can get the best interest rates, and get things done quickly. Although you have to pay a fee for the broker for services, the benefit and savings outweigh the fees.

Surprisingly, a majority (60-70%) of business owners in UK still pride in doing the task by themselves. Sadly, they are not realizing the effort and the time it takes to do the paperwork. In fact, it takes away considerable time out of their hectic business hours while hunting for the best rates, arranging the collaterals and looking into other nitty-gritties of loan approval.

In fact, most business owner can save or get better deals if they leave the task to experts.

Moreover, from practical experience, we know that it is easy for lenders to deal with brokers than to coordinate with multiple people. The fact is a commercial mortgage broker acts as a middle man between you and the borrower. Apart from that, brokers will do their best to provide quick service and fetch a good deal for you.

Hiring a commercial mortgage broker doesn’t mean you don’t study the different aspects of the loan. All the information you pick on the lending rate and repayment time, only help in striking a better bargain with the lender.

You can check various websites to learn about the current lending rates in UK and understand the current interest trends. Going through those fact hubs help you negotiate better and procure the right deal.

There are different terms that lenders use. By reading up for a while, you will get familiar with them. If there is too much technical jargon you find difficult, then a broker can always break it down for you.

So, what’s the benefit of hiring a commercial mortgage broker? Here are a few points in favour of hiring a broker, who can help you get the best interest rate and payment plan.

Save time and Money

If you don’t have sufficient time to call every lender in town and understand their lending program, then you need someone to do the investigation for you. When you are directly dealing with a lender to secure a loan, they will be only looking for their benefit. On the other hand, a broker will go the distance.

Apart from time saving and convenience, you can get free advice on the trends. They will also suggest the best time to apply, and the market trends to follow.

Wider choice & pick the best offer

When you deal with a broker or an agent dealing with one bank, then the chances of getting the best deal is relatively less.

Most experienced brokers have a list of lenders with whom they have close relationships. As a result, they have a broader range of loan options to choose from. Not only that; as a borrower, there are chances of getting a loan approved even if you have problems with your credit history.

You can ask your broker to collect all the details, and present a comparative study of the choices: the tax implications, tenure, and monthly commitment towards mortgage costs.

Fewer Complications – Brokers are professionally Trained

Brokers have been in business for a long time. They have the knowledge on the latest norms, rules and regulations. If you are a first-time lender, you won’t be familiar with the kind of questions to ask and negotiating the best rate.

Besides, there are chances that lenders will utilize your ignorance to sell a plan that is beneficial for their business. They will state the repayments associated with the mortgage, the terms the mortgage is taken out over and hidden costs among other things. In most cases, the terms and conditions will come alongside the quote for the mortgage, and understanding them is essential.

An experienced mortgage broker will collect the quotes from different sources and get you the best offer as per the market. Using their knowledge, they will put together a realistic picture for you. Besides, they will patiently explain the implication of each deal and answer all your queries.

Save time & complications during submission

Once you submit the personal and business details to your broker, the person will use the information to apply for loans with multiple vendors. Just imagine, if you had to deal with them separately! That’s a lot of time filling the forms online and offline.

Ask for referral

Ensure that you do your homework before you hire a broker. It’s important to check for broker credential, feedback, and experience in the field. Find out if the person is licensed by the government. Before you hire one, ask to see the license. If you know a friend or business partner, ask for recommendation. Someone from your professional network must have gone through mortgage. Ask for their recommendations and that saves the task of finding one by yourself.

Finally…

It’s clear that commercial mortgage is a lot more complex than residential loans. There is more paperwork, scrutiny, and verification. The amount involved too is much higher than required for residential funding.

Considering all these aspects, it’s advisable to take the responsibility off your shoulders and hire an experienced agent.

 

Author Bio:-

Matt Davis a partner at Empire commercial Finance, a firm specializing in Business Mortgages. seeking to serve client of UK with ease.  A company with expert professional  commercial mortgage brokers London most independent  business funding solutions

Fast Decision For An Instant Loan

We have all found ourselves in the position of needing a quick answer at some point in our lives. This can be particularly important when it comes to finance.

instant loan
instant loan

If you find yourself in the position where you have found the perfect car but the seller will only hold it for 24 hours, jumping through the hoops and cutting through the red tape with your bank or building society can be both tedious and ultimately a waste of time.

Fortunately some innovative lenders have seized the opportunity to cut down the application process to make sure that once granted, the balance of the loan can be transferred the account of the applicant within a matter of minutes.

What Type of Loans Are These?

There are lots of loans which currently fall under the bracket of being an ‘instant loan’ but none of them offer a better deal currently than the guarantor loan.

Guarantor Loans are a variation of an unsecured loan. The difference being that the application is backed by an additional party who co-signs the agreement promising to repay the loan in the event that repayments are missed by the borrower.

It is the presence of the guarantor which allows the lender to overlook the creditworthiness of the borrower and makes this type of loan perfect for anyone with a bad credit rating.

How do they work?

There are very few steps which need to be followed in order to apply for a guarantor loans and the ones that are crucial, could not be much easier.

Just follow the steps detailed below for a quick and easy answer.

  • Find a suitable guarantor
  • Make an online enquiry/application for instant assessment
  • Agree terms for loan with the lender
  • Receive the balance of the loan into your account
  • Make the required repayments

Once everything has been agreed, you will be free to spend the balance of your loan as you wish.

Is There Anything Else To Know?

Guarantor loans are as user friendly as any loan currently on the market but as when applying for any loan, it is of critical importance that the decision to submit the application is a fully informed one.

New responsible lending practices are now in place to ensure that people do not get placed in a position where they can borrow something which they cannot afford to pay back so it is vital that if you apply for a loan, you can afford to make the repayments.

Despite the speed in which the application process can be completed, guarantor loans are also ideal to fix long term financial issues as well and are often used for debt consolidation.

People often turn to a guarantor loan because:

  • They have a bad credit rating
  • They have previous CCJs (County Court Judgements)
  • They have been recently refused credit
  • They have no credit history
  • They are looking to find a way to improve their credit rating
  • They are looking for a cheaper option than some of the other instant loans such as payday loans

By following the information detailed above and doing a little homework of your own, you will quickly find that there is an option out there which cuts through the red tape and offers an affordable instant loan which does not compromise you in the future.

Bio – Amanda Gillam

I work as a blog writer for a finance company called Solution Loans which specialises in Guarantor Loans. I hold a degree in financial management and enjoy writing about a variety of topics including finance, transport, travel, sport and business.

Avoid Bad Credit Loan Scams Without Sending Money Upfront

Bad Credit Loan Scams

When come to bad credit loan scams, sometime the issue can be a lot more serious due to the so called loan lenders reap the benefits from people who not able to get loan from non traditional lenders because of getting a bad credit score or even totally no credit. It is rather critical for borrowers to be aware that even though some fees are required for selected loan services, but you are never need to pay any fee upfront if you are applying for an actual loan.

These types of unethical topics and also their techniques result in a superb damage to borrowers as well as the loan industry. The actual standing of legitimate online loan companies and also other lenders that offer loan and financial services such as intermediation gets damaged as a result of these practices.

To avoid such bad credit loan scams happening to you, you can refer to the tips below in order to make yourself able to recognize any loan scam from an online financial intermediary or legit bad credit lender.

Bad Credit Loan Scams on Money Down or Money Upfront

You should know that you will only required to put some money down on certain loans. Having said that, that money is not going to pay to the loan lender but is actually to the property seller that you are currently preparing to acquire using the money you receive through the bad credit loan. This amount of money requested as a general down payment, only restricts the proportion of the cost you are expected to get from the loan lender.

On the subject of money upfront, you must never give any money to the loan lender due to the fact just about any fee or cost is included in the bad credit loan. Therefore, you should realize by yourself that it didn’t make any sense by asking for money in order to offer loan. In case your loan lender is asking you to pay fee for security or insurance in order to offer you the loan, then it is very likely that you are having a bad credit loan scam (except for intermediaries that are legitimate to charge small fees upfront).

Can Intermediaries Be Bad Credit Loan Scams?

You can find a lot of online companies which provide intermediary services rendering the ways to access loan companies as well as various other financial services. A few of these online companies do charge a small amount of money for the services they provided and this is totally legitimate. For these companies, the practice that carry out by them is legit due to the fact that these online companies are not offering you any bad credit loan but only the intermediary services. Therefore, it is legal for them to charge you for a small fee when you ask for their itermediary services.

bad credit loan scams

The things that these online companies do is collect loads of information relating different loan lenders and provide it to consumers by using a web portal. These companies may also provide some advice regarding which type of loan should consumers which to get by figuring out the needs as well as qualifications that consumer gets. By going for such companies, you are able to save your time and money. Therefore, these companies have the reasonable reason to charge you a small amount of fee for intermediary services. But you should keep in mind that they are not going to offer you any loan since they are not qualified for.

How To Know If You Are Getting Bad Credit Loan Scams?

You will find points that can let you know whether a loan offer is a scam or not. For instant, in case you happen to receive a phone call, an email, or are surfing online and being redirecting to a site that asking you to make the payment as a deposit or security for getting a bad credit loan, then there will be very high chances you’re having a bad credit loan scam. And the method they provided for you to send the money can immediately ensure you the actual scam.

Should you be asked to make a payment in cash via post, money order or some other services it is advisable to deny about their legitimacy instantly. On the contrary, the majority of bad credit loan intermediaries that are legitimate online companies are going to provide you with the reputable and secure payment methods online like paying through Credit Cards or Paypal.com that is able to protect you from bad credit loan scams. By using these secure payment methods you can get your money back through them if anything happen.

Mortgage Loans Made Easy For You

Everyone wants to buy a home of their dreams. The cost of the homes seems to have no stopping with the demand increasing and keeping momentum always. However, buying them can never be easy as one will need to get the loan for the same because if one takes to savings it may take decades and even after that the gap will prevail between the property prices and the money you have after all your efforts. Which will mean more money and hence you will have to take loans even after those many years of effort. Also if you decide to invest in the safe options, you are less like to get good returns and the one that you get will hardly mask the effect of inflation.

debt

A lot of people prefer buying a house by taking a mortgage loan in which their house is kept as collateral and monthly installments are to be paid against it. These loans can be both long term or short term loans in which long term loan is for thirty years and the short term loan can be from fifteen to twenty years. Mortgage loans are of two types, fixed rate mortgage and adjustable rate mortgage loans.

Fixed Rate Mortgage

In case of a fixed rate mortgage, the rate of interest paid by the borrower remains the same throughout the term of the loan. This helps the borrower to budget well and know what he is going to have to [pay by the end of the month. The debtor does not become a victim of the fluctuation in the market and of inflation as well. But on the other hand, in case the market rate goes down, the homeowner with a fixed mortgage loan will not benefit at all. The rate of interest offered in case of a fixed rate mortgage is high as the lender has to face the effect of inflation and so, they compensate for the same.

Adjustable Rate Mortgage Loans

In this type of mortgage loan, the rate of interest varies depending upon the market conditions. The repayment plan also has a considerable effect. There are some loans in which fixed rate is there for some time, say ten years and then they are adjusted depending upon the market condition. This is a disadvantage for the homeowner because they are supposed to pay higher installments which becomes a burden and often leads to loan default. The initial rate of interest is generally low when the loan is taken and so, people who expect their income to rise in the coming years prefer this type of loan. So while taking any promotional loans go through the complete details and ask questions to the lenders wherever you find a doubt.

Mortgage Refinancing

There are times the homeowners are not satisfied with the interest rates offered by their lenders and so want to switch to some other lender. The other reason for the existing high rates on their loans may be that when they took the mortgage for the first time there credit rating was not that good and hence they were offered a higher interest rate. This process is refinancing your mortgage loan in which you take another loan to pay off the existing loan for better terms and rate of interest. Over a period of time one finds that their credit rating has improved and with the improved credit rating the homeowners get the rate of interest they want by negotiating well.

The lenders always are in a lookout of the borrowers with good credit scores so that they can benefit as much as they can from them and so, they are most likely to accept your proposal and give you the loan. You must be prepared for a lengthy procedure when you are planning to get your mortgage loan refinanced as it involves a thorough underwriting and a lot of checking to make sure there is not fraud involved.

For more updates you can visit: http://www.sbwire.com/press-releases/great-online-lender-offering-installment-loans-for-bad-credit-this-year-199993.htm

Mortgage Mistakes: How Not To Make Them

If your dream is to own a home of your own, you already know that your credit score is critical, and that you should maintain as high a credit rating as possible. However, you might not know precisely how to obtain and maintain good credit. While some factors that can sink your credit score are obvious, others may surprise you.

mortgage mistakes

Obtaining mortgage pre-approval can give you a boost in obtaining the home you want. Prequalification can also be helpful, but pre-approval is preferable. The pre-approval process is more rigorous than the process for prequalification, and produces an actual commitment from a lender, under certain conditions. Prequalification does not.

Along with prequalification and pre-approval, it is important to avoid the following basic mistakes in seeking a mortgage. While you may be able to obtain a mortgage if you have one or two of these strikes against you, the interest rate for your mortgage will be significantly higher than the mortgage rate you could possibly obtain with an absolutely clean record. If you carry too many strikes against you, or even one or two of the wrong strikes, you could be out of the running for any mortgage for years to come.

  • It should go without saying that bankruptcy and foreclosure are absolute mortgage approval killers. Avoid both if at all possible. If you have either a bankruptcy or foreclosure on your credit report, you may have to wait years before you are able to obtain approval for a mortgage.
  • Avoid late mortgage payments, which can also kill your application even if your credit is otherwise up to par. If you have a legitimate reason for missing mortgage payments, and can document that the problem is in the past, you may be able to overcome this hurdle.
  • If you list a property for sale, don’t attempt to refinance it. Lenders will take a dim view of this action, and will probably disqualify you for a mortgage.
  • Get rid of erroneous charge-offs and collections, and resolve legitimate adverse items. Both items will sink your credit score like a rock.
  • Avoid credit counseling, at least immediately before you go mortgage shopping. Lenders are skittish about lending large sums to potential borrowers who have trouble paying their bills.
  • Don’t rack up a slew of new credit cards or max out the cards you already have. Put off buying big-ticket items unless you can afford to pay cash. Too much debt can kill your mortgage application.
  • Unless you’re a new grad with a great job offer in hand, don’t try to get a mortgage until you can establish no less than two years of steady employment with consistent income.
  • Don’t try to get a mortgage unless you can show a good housing history for at least the past twelve months.
  • Avoid attempting to apply for a mortgage unless you can document sufficient liquid assets to cover the entire mortgage note, including taxes and insurance.
  • Don’t attempt to obtain a mortgage without at least three favorable credit trade lines, with at least a two-year history for each trade line.

Mortgage Rates and the Factors Which Decide the Same

Owning a house is a dream followed by all in today’s world. There are ample reasons for the same. However, all would agree to the point that it is one of the safest investment options available in the current economic scenario which offer multiple benefits including tax benefits on the repayments made.

However, getting the loans is one of the major tasks and it requires one to do extensive research and study to get the best terms and affordable rates. Moreover, mortgages or the home loan decisions are long term decisions and even a small difference in the interest rates can mean a lot of savings for the borrowers. Getting a lower interest rate, flexible repayment terms and a reputed and reliable lender is not an easy task. So here are some of the tips which will help you through one of the toughest and the most valued decisions of your life.

mortgage rates

Get hold of your credit score-

In the current times when the property rates seem to be sky high and still rising one has to settle for a mortgage loan to achieve their dream house.

Before you approach a lender, you must be aware of the things they require, the questions they might ask, the kind of documents they might ask you to submit and above all your credit score and report. Going prepared to the lenders will always help.

As a first step contact any or all the three bureaus for a copy of your credit score and the credit records. With a little research you can get an understanding of the way it works and how to check the correctness of the data and entries in your credit report. Scan the report for any discrepancies and if you find any contact our credit bureau with a written request for the removal of the same. Remember, wrong entries often pull your credit score down.

Once you have fixed the issues with the credit rating, it is suggested that you attach a copy of your credit score wherever you apply for a loan. This would prevent the lenders from making a hard pull on your credit score.

Since lenders take a look at the current score and not the old ones, get the recent one once you are out in the market applying for the loans for bad credit. An individual is entitled to free access to their credit reports from all the bureaus once in a year.

Even lenders respect the borrowers who come prepared with all the necessary documentation and the details. It expedites the lending and the approval process.

 

Down payment and your interest rate on the loan

Loan to value ratio or the LTV ratio as is popularly known decides the amount required by the borrower to pay as a down payment. In majority of the cases the down payment required is 20% of the value of the property which often comes out to be a large chunk of the money given the value of the houses in the current times.

However, there are a lot of borrowers who plan their mortgages in a way that they are successful in paying a higher down payment than the minimum threshold required. In such cases the value of the loans decreases and this means lower lending risk for the borrowers and hence they agree to a lower interest rate on lending.

Refinancing decision

Yet another factor which decides the interest rate is the kind of mortgage you are taking. Whether you are taking a new loan or a refinance will affect the kind of interest you get on the mortgages.

In case of the first time buyers, if you have a good credit score and have enough savings to pay a higher down payment, you can save on the interest rates.

For those who are looking to refinance their home and hold a higher equity; lower interest rates and flexible interest rates are easily available for them.

FHA loan options – These loans are government backed loans offered by the Federal approved lenders. It is best suited for those who are the first time borrowers of the mortgage loans, are looking for fewer complications and better interest rates. In addition to this one has to pay lower down payment too.

Decide on the loan tenure- Whatever the kind of loan, try and apply for a loan tenure which offers you an affordable monthly payment. One should account for the interest rate fluctuations too. These can be drastic and at times may see your monthly EMIs double on account of interest rate rise. Use of EMI calculators can be a great help. Longer tenure means lower EMIs but one has to pay a bigger amount towards the interest part too.

 

Clarify the applicable fees – One should research online and find out the fee charged by different lenders. There are several fine points associated with the lending agreement in which one often overlooks being lost in the hoopla of the lower interest rates advertised by the lenders. At times it may so happen that the interest rates charged by the lenders may not prove to be really attractive when compared with the applicable fees around.

Get pre- approved for the loans– When you are sure of a budget for the house you want to purchase, it is better to get your loan pre-approved. It requires less documentation and a day or two to get the approval. One will find it really helpful because once you have a loan budget you know the amount for which you can buy the house taking the down payment and the other associated charges with the mortgage loan into consideration.

So follow the aforementioned tips to get the best mortgage rates.