Mighty Mortgages

Unlike the regular residential loans or even commercial loans, new construction mortgage loans are different. These are loans requested from a lender to assist the financial needs to build your dream house. The definition is truly very attractive to many dreamers of a wonderful home, but the basis of your construction loan approval is similarly strict.

The construction loan lender would require you the borrower a detailed list of preparation, explanation, and accounting information for the cost estimation of your home construction project. The lender will have to see your capacity as a homebuilder and planner until the result of your work materializes. Once you have passed the initial screening, only then that they will ask you to submit the documents of your financial capacity to earn and repay the loan. A good credit reputation will also help the approval of your loan.

There are various types of new construction mortgages loans. These are the construction to permanent loan, remodeler loan, bridge loan, and lot or land loan. The construction to permanent loan is ideal for majority of people wanting to build a house, because it only requires the borrower to submit documentations and pay the closing expenses once. It is a combination of a permanent financing and construction loan. This type can definitely help you to save more money and more time during the process. The remodeler loan type is a mortgage type made only to support home improvement or remodeling project by owners. The bridge loan type permits the borrower to make use of the equity on your current home and serve as down payment for a new home. On the other hand, the lot or land loan supplies you funding for your purchase of land instead of constructing a house.

However, picking a new construction mortgage lender is as difficult as choosing a friend, because if you choose the wrong lender and mess up in your payments, some of them can really be very harsh and grabby at once. Should you decide to get a construction loan, you have to consider some valuable guidelines.

Picking the right lender needs thorough decision and research. Gather several companies first and see what they offer. Find out if they are trusted and licensed lending institutions by asking around. Some friends or relatives may shed light on the background of these lending firms. Once you have few preferences at hand, ask for their terms and conditions. Review it carefully. If you have any information that seems to be unclear, ask for an explanation on this.

Although you have dreamt of having your own home built, borrowing is still risky if you are not responsible enough to take care of your finances. Every decision, when it comes to borrowing, has to have sound preparation and evaluation of your capacity to repay the new commercial mortgage loan. Besides, you do not want your new-built home in front of you but with other properties taken away at the same time.

Mortgage brokers are dime a dozen. They are scattered everywhere. They come in different shapes and sizes, of course with different price tags too in terms of the amount of professional fees they charge or commissions they get.   Some of the different types include independent, wholes and reverse mortgage brokers.  In general though, mortgage borrowers need to hire the services of a mortgage broker to help him or her every step of the way to securing a mortgage loan.

Your choice of a mortgage broker can spell the difference whether the procedure in securing the mortgage loan for your dream house or property will be smooth and fuss-free or complicated and even fraud-ridden or anomalous.

First things first, make extra sure that you are dealing with a reputable organization. Choose a mortgage broker who is competent, credible, professional and, authorized or accredited by a legit company. Where do you find a mortgage broker like this? Your first consideration should be the advice or recommendation of friends or relatives who have recently secured a mortgage loan or purchased a real estate property.

You can also do your own homework or research. Ask around. Better yet, surf the web. There are a number of websites that provide listings of mortgage brokers as well as comparisons of the best or more reputable ones. You can make a short list, email them for inquiries or talk to them over the phone—which a better option.

Do not hesitate to ask all the questions you have in mind or discuss concerns, however small or irrelevant they may seem to you. Do not get sidetracked by the sales pitch of mortgage brokers. Stick to your questions and make sure they are answered and have been explained clearly to you.

There are also many offers or packages advertised everywhere, especially in the Internet. Do not get enticed right away. Some of these special deals are really too good to be true and most of the time they are. Trust your instincts and good judgment. Make sure these special offers are in black and white, in case you want to avail of them. Keep them in a record or file for future reference. It is better safe than sorry, as they say. So if in the future, disputes may arise, you have a proof or evidence.

Beware of mortgage brokers who cannot even provide a business or calling card, more so those who do not have an office. Even if you are dealing with an online mortgage brokering service, you should make an effort to visit the company’s office and see how they operate there.

It is also best to discuss professional charges and commission during the course of choosing for a mortgage broker. Most of these charges or fees would be shouldered by you. So you have every right to ask questions about them.

The most important thing in your search for the best mortgage broker is to find somebody with whom you would be comfortable dealing with. After all, you will have to deal with him or her for a great deal of time. Good luck.

There are many types of mortgages, for many types of circumstances.  One such specialty mortgage I would like to discuss today is the  buy to let mortgages.  This refers to a loan who’s purpose is to purchase property in order to let, lease or rent it out.  Usually they are interest only.  The amount that can be borrowed is determined by a percentage of the appraised value of the property.

These buy to let mortgages are a type of mortgage supplied to assist property purchases or remortgages for savings in the private leasing segment. These companies evaluate a borrower in accordance to several factors such as the projected leasing income and the possibility of taking into consideration the borrower’s existing mortgages. Buy to let mortgages can be at fixed rate, capped rate, discounted rate, or variable rate.

At fixed rate, the monthly repayments of the borrower remain the same during the period of fixed rate, despite the interest charge in the marketplace. What is good about this rate is that it protects you the borrower from unexpected inflating interest rates, in cases wherein you only have limited funding. When the variable rate drops under the fixed rate level, your repayments will not go down. In addition, your mortgage switches to a variable rate when your fixed rate period ends.

On the other hand, a capped rate has a maximum interest fee for a specified term. This means that the interest charges that you pay cannot go higher than the approved capped rate. Then, you are aware until what rate your monthly payments could only go further. Nevertheless, when basic rate goes down below the capped rate, a reduction in repayments is also experienced. In other cases, capped rate lender sets a minimum level, under which the fee you pay will not likely drop.

Discounted rate provides you decreased payments only for a particular term. This pertains to discounts that the lender extends out of their standard variable rate. Take for instance your variable rate is 8%, the lender provides a 1% discount, so your initial repayment of interest falls to 7%. However, for every increase or decrease of variable rate experienced, so does you repayments, too.

Variable rate is also unpredictable; you do not have a standard monthly cost for your borrowings.  Your monthly repayments increase or decrease as the interest fee changes, too. This is rather beneficial only when the interest rates are continuously falling, because your monthly payments follow suit. Yet, if the interest rates keep increasing, it is not advisable for borrowers.

Many financial analysts said that buy to let mortgages have been sourcing out funds for property owners, since this mortgage gives you the opportunity to purchase a house that you plan to let. This mortgage also has a variety of terms and conditions for conventional mortgages and can be set with no broker fee or at rates as low as few points over the base.

Recent observations show that buy to let mortgages are signaling a positive vibe in the marketplace, besides the fact that the chaos experienced in the subprime market may add up to the rising demand for buy to let properties.

So purchasing a property to let can be beneficial in a couple of ways.  In addition to producing income, there is an opportunity for long term capital appreciation.

There are numerous reasons why people choose to purchase a 2nd home. They can range from a rental property for investment to a vacation home to a fixer upper that will be flipped in the short term. Regardless of the driving force behind the purchase one thing will remain the same: you are going to need a 2nd home mortgage.

Financing a 2nd home can be challenging because lenders have specific criteria and conditions for approval that often are different than those required to purchase a principal residence. You may need a larger down payment and / or have a sizable net worth. If you have very little equity in your existing home then it will be that more difficult to secure a 2nd home mortgage. However if you have built up equity in your principal residence you can take out a home equity loan or line of credit and apply that against the down payment required on the new purchase. 2nd home interest rates can vary depending on weather or not the property is considered an investment or not.

You will find that it is generally easier to be approved if the home is not an investment property. Especially easier if you do not require the rental income qualify for financing. Lending institutions prefer home that are being purchased and will not be rented out at any time and they reward those borrowers with more favorable terms and interest rates.

It is for this reason that when you are shopping for a 2nd home refi, your lending will ask to see your tax return. They are checking to see if you have claimed any rental income and if you have then the home will be considered an investment property and your rate will go up.

It is recommended to consult with your mortgage lender or broker what will be required so those details can be tended to before you find yourself in the negotiation process with a prospective seller. Additionally when you are negotiating a purchase price you want to be able to act quickly and with confidence.

Taxes can be confusing when you own a 2nd home and the ins and outs will vary depending on weather or not you are or intend to earn income from the property. Additionally how much time you reside in the home throughout the year can make a difference as well. Be certain to consult with a tax professional so that you can accurate advice as it relates to you specific situation.

If you are purchasing the 2nd home for your personal use, but it will remain unoccupied for a significant portion of the year, then you will want to pay particular attention to home security and the crime activity in the area you are buying.

Even if you are purchasing the home for your personal use, you still have the option of renting it out during the time that you will not be using it. The rental income earned can then be applied against the mortgage payment. This strategy works particularly well if you are purchasing the 2nd home to be used in retirement. If it is your vacation home, then you may run into obstacles with respect to finding a renter who will not need the home when you want to use it.

Remember interest rates on 2nd home mortgages are usually higher if the home is rented out at all through out the year as it is then considered an investment property.

When you have a good credit history your loan application process is generally completed smoothly. Unfortunately not everyone is in this boat and for those with bad credit getting a mortgage can be a great deal more tumultuous. However there is an ever increasing rise in the amount of people in this situation and consequently the mortgage industry has responded with a wide variety of options and products. Bad credit mortgages are now available for those with a poor credit history.

Traditionally lenders have avoided dealing with clients who have bad credit. That situation has changed significantly with the rise of a whole industry of mortgage loans for bad credit. The interest rates and terms can be almost the same with only marginal differences. These mortgages can even have their amortizations (the amount of time the whole loan is spread over) set at forty years and new options are being introduced all the time.

Bad credit history can happen to anyone for a wide variety of reasons, some preventable and some not. Health care costs, job loss and divorce are just a few of the reasons that someone may find themselves in the position of having a low credit score. A previous bankruptcy, collections, court judgments and others can all count against you and prevent you from qualify for a regular mortgage.

With any of the above black marks on your credit record you can still find a high risk lender who will give you a loan, but you need to be especially careful as there have been numerous reports of unscrupulous individuals who are quick to take advantage of you in this situation.

Bad credit mortgage lenders are also called sub prime lenders. Banks and other mortgage companies like them are called prime or first tier lenders. The sub prime lenders are, just as the name suggests, lenders who provide money for those with poor credit who do not qualify for the stricter approval criteria put in place by the prime lenders.

As the demand for sub prime lending has sharply increased, many mainstream lenders are purchasing sub prime mortgage companies to augment their services and take advantage of the tremendous opportunity for growth that this market offers.

The poor credit mortgage market is not restricted to the United States either. It is estimated that one in four people in the UK would not be approved for a standard mortgage because of a bad credit history.

At one time there was a sense of shame associated with needing a specialty product such as this. That is certainly not the case nowadays and you should not let yourself feel like that. Many people form all walks of life need a bad credit mortgage for a variety of reasons.

Just because you can get a mortgage with bad credit does not mean that you should get in over your head or pursue something that is more than you can afford. You want to make sure that they monthly payments are reasonable and within your budget.

Getting a bad credit mortgage is the first step in repairing your credit rating. Once you have shown that your credit behaviors have changed and you can be responsible with the payments it is more likely that when it comes up for renewal that you will then be eligible for a regular mortgage.

Specific mortgage loans are designed for people with poor credit. The idea is to fix your credit within a year or two. In this regard you should try to get a short term mortgage with a 2 or 3 year fixed rate. Do not confuse this with the amortization, which is the total amount of time the payments are spread over. The term is the period for which you are locked into the rate and the payments. When it comes up for renewal you are eligible to pay it out without any penalties and you can renegotiate the terms and interest rate.

All bad credit mortgage loans are not created equally. The interest rate you are charged is on a sliding scale depending on your credit risk. So if your credit is only marginally poor, then you may only be looking at a slightly higher rate.

If you are still turned down even after exploring all of your options then you may want to consider consulting with a credit repair company. These programs can sometimes help you to improve your credit score in a rater short amount of time.

As you have probably noticed in the headlines, sub prime mortgages have been in the news a lot. This has made some lenders a little more cautious, but it does not mean that there is no one still offering them, you just have to do a little more looking around.

A stated income home equity loan is one where your bank or mortgage lender does not confirm your income or assets in order to give you an approval. While this seems hard to believe at first, this type of loan does indeed exist and has been a saving grace for those who are self-employed, earn commissions on sales or otherwise have difficulty supporting their income with traditional documentation. Because of the additional risk taken on by the lender with a stated income home equity loan, the borrower usually has to have an above average credit report or FICO score.

How much you can borrow

Sometimes called a “business for self” or “alt a”, this loan allows you to borrow money against the equity you have built up in your home. The amount of equity you have is calculated by subtracting the amount you currently owe on your mortgage (if any) from the current value of the property. For example if your home is currently appraised at $240,000 and you owe $60,000 on it, then you have built up $180,000 in equity. Some stated income home equity loans would permit you to access the whole $180,000 or in other words, refinance up to 100% of the property value.

Purposes for a stated income home equity loan

You can use the proceeds from a home equity loan for whatever you wish. Some of the more common uses are:

• Renovations
• Medical expenses
• Children’s University expenses
• Consolidate credit card debt and/or personal loans
• Vacation
• Purchase a vehicle
• Purchase an investment
• Purchase a rental property

So you can see there are many good reasons to borrow money against the equity in your home, but before the introduction of the stated income home equity loan, it was hard to get approved if you could not provide supporting documentation to prove how much money you make.

Why stated income

The need for this product came about to address the difficulty the self-employed and business owners have meeting the regular mortgage approval criteria imposed by banks, financial institutions and mortgage lenders. Payment affordability is a major criteria lenders consider when determining whether or not to grant a loan. Usually there is a threshold where the lender will not allow your expenses, including mortgage and loan payments, to exceed a certain percentage of your monthly income. This is called your DSR or debt service ratio.

Easier to qualify

The problem with the self-employed is that they legitimately write-off lots of business expenses, which reduces their documented income. Let’s take a cell phone for example. A regular salaried employee may have a monthly cell phone bill which they pay and it has no effect on their documented income. Someone who is in business for themself could have that same cell phone bill, but because they also use it for business purposes, they can subtract that expense and reduce the amount of income they report and have to pay tax on. There are many types of expenses such as this and a good accountant will take advantage of as many of them as possible. This is great for the self employed personal at tax time, as they are reporting a very low income. However it is not so good when they wish to apply for a loan or mortgage, because their income docs suggest their income is not high enough to afford the payments. Of course they can afford the payments, because their actual income is much greater than what they can prove.

When these individuals are applying for credit under traditional, full documentation guidelines, because their reported income is great enough to qualify, they often have to show that their income has consistently been at this level for a number of years. Financial institutions and mortgage lenders realize that the nature of a small business can include volatile revenue so they want to ensure that they income level they are applying with is not an anomaly due to an uncharacteristically successful year. Again, just one more reason why the stated income home equity loan is so desperately needed by this particular market segment.

Who is eligible

It is not just full time self employed people or small business owners who may apply for a stated income home equity loan. There are many circumstances where a regular salaried employee earns additional income beyond what is reported on their pay stub. This could include money from a hobby, internet business, or a second job to state just a few examples. In each of these situations the borrower could benefit from the stated income conditions and access the equity in their home where they otherwise may not have been able to.

Mortgage customers come with all sorts of different personal financial circumstances. Often a cookie cutter, one size fits all product will not be sufficient to meet the needs of the entire market. Innovative borrowing solutions like the stated income home equity loan are just one example of the industry taking notice that it needs to be flexible.

Today we are going to discuss the combination of two great borrowing solutions known as the stated income home equity line of credit. This flexible product allows a homeowner to borrow against the equity built up in the home on a revolving credit line without have to provide documentation to support how much money he makes.

I covered previously in my article called Stated Income Home Loans, that the self-employed, small business owners and commissioned sales people often have a difficult time proving to a mortgage lender or other financial institution how what their true level of income is. They do not get W2s or pay stubs in the traditional sense and often “write-off” a large portion of their income to legitimate business expenses. This leaves them falling short of the debt service ratios that banks use when qualifying borrowers for loans and mortgages.

The stated income loan was introduced to address that problem by allowing strong borrowers to obtain credit without have to provide documentation to prove their income level. While this brought with it a bunch of new challenges for lenders, it allowed the self-employed and commissioned sales people to borrow money with greater ease.

A home equity line of credit is simply a revolving credit line that uses the equity you have built up in your home as collateral. Banks love real estate security and will gladly offer high limits and low interest rates in return for it. Once set up, a HELOC allows you borrow funds whenever you wish. As that amount is paid down, it becomes available to you to borrow again up to the limit of the line of credit. The funds can be used for anything from a down payment on a rental property to a new car to financing your children’s education.

The stated income equity line merges both of these unique needs into one great mortgage product. For those who are unable to support their income by traditional means, yet desire the low rates, high limits and flexibility of HELOC, this combined product is a perfect fit.

A good credit score is still really important. But having said that some stated income programs allow you to borrow up to 100% of the purchase price or the appraised value of the home in the case of a refinance.

Before the sub-prime mortgage meltdown, it was possible to obtain a stated income line of credit without verifying assets either. These are becoming increasingly hard to come by and it is more common to find stated income / verified assets loans and equity lines.

The days of one borrowing solution fits all are long gone. Lenders have gotten more and more creative to meet the unique needs of today’s home buyers. If you are self employed and have built up equity in your home and would like the ability to access it as you need it, instead of all at once in one lump sum, the stated income home equity line of credit was created just for you.

In years past it was much simpler to apply for and be approved for a stated income home loan. You did not need to have an exceptionally high credit score, or even necessarily a down payment and you could be approved for a mortgage without providing documentation supporting your earnings.

Default on Stated Income Loans

Well the landscape has changed and mortgage companies that allow stated income for financing are no longer being as fast a free with handing these out. You need to establish yourself as being much more credit worthy in today’s environment. In the post sub prime mortgage meltdown, default on stated income loans is on the rise.

Introduced as an opportunity for those with income from difficult to verify sources, stated income home loans were a boon for the self employed and commissioned sales people. People in these circumstances often have difficult time providing proof of their earnings. For example, they are not given pay slips, or even W2’s. Sometimes the mortgage rate or associated fees are a little higher, but these costs are offset by the opportunity to purchase home where you otherwise may not by able to under traditional qualifying criteria. And if you FICO score is very high, you can even finance one hundred percent of the purchase price. Naturally, if your credit score is way above average, high interest rates can be mitigated.

Stated Income Mortgage Rules

Hopefully with the tighter controls on qualifying for stated income home loans, they can work toward shaking their stigma as liar loans. You see it was not uncommon for potential home buyers to opt for this program even when they were capable of meeting the requirements of full doc loans. They would misrepresent their borrowing capacity so that they could be approved for a mortgage that was in fact beyond their means. What these applicant don’t realize is that lending institutions have put these policies in place to not only protect themselves from foreclosing, but to protect their clients from being put in a situation that will ultimately be difficult for them to live up to. Stated income home loan rules are put into place for your own protection and it really is not in your best interest to try to circumvent them.

Getting a mortgage with bad credit attempts to bypass one of the most important criteria that determines whether or not you can get a loan: your previous credit history. So much depends on your credit record and how you have handled your previous responsibilities. A poor credit history suggests that your loan application will have difficulty being approved. This problem is made worse if you have declared bankruptcy or been foreclosed upon. This previous credit challenges will also get in the way of applications for home equity loans and second mortgages. However all hope is not lost and people with bad credit can get mortgages or financing to buy a home. Bad credit mortgages are available to people who need them. They are a little harder to find so you really have to do your research to connect with a lender who specializes in your type of situation.

These are what are referred to as sub-prime lenders. Banks and credit unions would be prime lenders and mortgage finance companies that charge higher rates and fees to borrowers with poor credit are sub-prime lenders. The have got a lot of bad press lately, but there is a market to lend to people with lower credit ratings. Often these individuals have found themselves in this situation due to circumstances beyond their control. Any number of reasons such as job layoffs, medical expenses, marital breakdowns can contribute to the decline of someone’s credit rating. Once the problems are put into the past the borrower may be an excellent client, but with their bad credit rating, they will not have the same options available to them as borrowers with a clean credit report. Before getting a mortgage with bad credit from a sub-prime lender it is imperative that the borrower review all of their options and if they intend to proceed they must read carefully all the fine print. The costs and fees can be unreasonable and the borrower needs to make themselves familiar with all the details.

And remember it is possible to find a loan at a good interest rate and acceptable charges, even if you have a poor credit history. If you are in this situation, talk to real estate agents, mortgage brokers and online lenders. You can get a good deal.

In this case comparison shopping is even more critical. Compare and review and you can be certain that you will get a mortgage with bad credit that has a reasonable interest rate and affordable payments.

Real estate agents help people who are buying a home find people who are selling a home. A lot of real estate agents also assist property managers by finding tennants for landlords. Often real estate agents are contracted by property management companies to maintain a property while it is listed for sale. They will tend to such matters as ensuring the home is presentable for sale as well as ensuring that the pipes don’t freeze etc in cold weather.

The real estate agents get paid by charging a commission for their services. When they find a buyer for a home that is selling they will get paid a pre-determined percentage of the sale price. If they are carrying out duties for a property manager then they may get paid a percentage of the rent collected.

A lot of trust is placed in realtors. Often the keys to the home are left with them and they have free access to the residence. They will arrange viewings for interested buyers etc. Because it is their business to know what is going on the the real estate market, they are an excellent source of up to date information. In fact, often what a real estate earns for a living is determined by how skillful they are at staying on top of this information.

Realtrs are the best place to turn if you need to know what is going on in the market in a particular region. They can often provide very quick data. They will know what the going prices are for specific types of homes in specific locations. Additionally through their relationships with lenders they can also suggest where you can go to get the lowest mortgage rate possible.

Some who is selling their home can get thousands of dollars more my taking the advice given by a good real esate agent. A good real estate agent will also take the time to understand the unique needs of a home buyer and give suggestion and what type of home they could find given their available budget. He or she will not just give them listings of a bunch of properties but will tailor their suggestions to what they buyer is actually looking for. And remember this type of quality service works in the best interest of the real estate agent as well. The sooner they can sell a home the sooner they will get paid and if they do a good job for both the buyer and the seller the will get more business through referrals.

If you are buying a home or selling a home, ask your friends, family and co-workers if they have any personal recommendations of a real estate agents that they have had good success with. It is so much better to get off on the right foot with a good one then to try to undo they damage, cause by one that is know to be ineffective.