Loans and Mortgages Blog

Avoid Needing a Bad Credit Mortgage – Fix Your Credit Now

If you have bad credit, you may get stuck with a high risk mortgage with a higher interest rate, prepayment penalties and high closing costs. The best thing to do is to avoid damaging your credit or to repair it as much as you can before you apply for a mortgage. To fix your credit, begin by getting a copy of your credit report and getting your current FICO score. Make sure all the information on your credit report is correct, and if it isn't, get it repaired. Then consider consolidating your credit card debt, student loans and the like and always make your payments on time. In time, your score will improve and the money you save by getting lower interest rates will be worth all your work and sacrifice.

Finding Bad Credit Mortgages Online

Just because you can't qualify for an "A" paper loan, doesn't mean you are without options. There are many decent bad credit mortgage options available if you take the time to look around or if you find a good mortgage broker you can trust. Online lenders usually have a ton of bad credit mortgage programs you can compare and choose from. Don't feel as though you need to only go with one broker though. Different brokers may be able to provide you with various interest rates, loan terms and loans with or without prepayment penalties.

Applying for Bad Credit Mortgage Loans

Bad credit mortgages, although not the best option, will help you rebuild your credit quickly. If you want to apply for a bad credit mortgage, you'll need several pieces of information before you proceed. First, make sure your credit report and score are accurate. If removing old or closed accounts or removing something that is incorrect from your credit report can improve your score, even slightly, it is worth the effort. Next, you'll need data on your income including pay stubs, deposit slips and the like. Bad credit mortgage loans will often hinge on your proof of steady income. Finally, you'll have strict repayment guidelines. Make sure you can make the payments on time and in full. Don't get in over your head and make your bad credit situation even worse.

Need a Mortgage with Bad Credit? Not the End of the World

A few bad credit mortgage tips to make sure you get the best deal possible:

1. Shop Around - Don't be embarrassed by your bad credit, embrace the challenge of taking steps to improve it - and a mortgage can absolutely be one of those steps. Talk to different mortgage brokers and look online at your bad credit mortgage options.
2. Make sure your credit score is correct. Remove paid off or closed accounts - make sure you aren't a victim of identity theft or mis-reporting. It can take some time and effort to fix your credit report, but it'll be worth the work.
3. Once you have a bad credit mortgage, use it to your advantage. Making mortgage payments on time is the fastest road to improving your credit score.

Need Cash to Pay Off Old Bills? Take a Bad Credit Second Mortgage

When you bought your home, your credit rating may have been in better shape than it is now - but maybe now your only way out of the debt hole you are in is by pulling out some home equity. Don't refinance your primary mortgage - preserve that good rate - consider taking out a bad credit second mortgage. A bad credit second mortgage, when taken out for debt consolidation or payoff, can be a great option to help you out. The fees will be relatively low - and many loan companies require proof of payoff so you won't be able to spend that money on anything but what you really need it for.

Advantages to a Bad Credit Mortgage

A bad credit mortgage may leave you with a bad feeling in your stomach, but in reality, despite the higher interest rate, this is really a smart next step towards reaching your financial goals. When you consider the benefits of home ownership and credit repair, the short term obstacles of a bad credit mortgage are well worth the risks. You won't be throwing money away on rent, on time mortgage payments are the fastest way towards credit repair, and you'll truly be on your way to improving your financial situation through smarter investment of your money. Take advantage of bad credit mortgages to move forward. The short term pains are worth the long term gains.

Choosing Between Bad Credit Mortgages

When considering your options for bad credit mortgages, look out for the following three pitfalls that can sneak up on you:

1. Fees and Penalties – Sub prime loans can not only cost more to process, they can also incorporate higher late fees and payment penalties of which you should be aware.
2. Prepayment – Some bad credit mortgage companies need you to stick with their program to ensure they make their allotted profit - and this can mean prepayment penalties (a fine for paying off the mortgage too quickly). This can mean a huge loss if you refinance too soon, so watch out for length and amount of prepayment penalties.
3. Rewards – Some mortgage companies and banks will reward you for improved money management. For instance, if you make a number of payments on time, your interest rate may be reduced. These kinds of incentive rewards are great for folks determined to turn over a new and better credit leaf.

Finding the Lowest Rates on Bad Credit Mortgage Loans

Shopping around is the key to protecting yourself from a bad credit mortgage mistake. It can't be said enough, shop and compare bad credit mortgage programs. Even if you love your mortgage broker, make sure he or she explains the nuances of the programs they have available so you and your broker can make the best decision for you. Also, don't be afraid to shop online. Online mortgage brokers today carry lower overhead and more programs than ever before. Try one out and you'll find that your options are greatly increased - and you'll probably end up with a better program.

Refinancing a Mortgage with Bad Credit

Ironically, someone who secured a great rate in 1985 can get an even better rate today with worse credit. The incredibly low interest rates today make even sub-prime loans affordable. If you think you can get a better interest rate, even with bad credit, look into bad credit mortgage options or bad credit second mortgage options. If you aren't sure about proceeding, just hop online and use a mortgage calculator to figure out how much you might save or learn for yourself that there is no real benefit.

Refinancing Your Bad Credit Mortgage

If you've been religious about making your mortgage payments on time and you've paid down your credit card debt and raised your FICO score, it may be time to refinance that bad credit mortgage you secured a few years ago. You are probably safely beyond your prepayment penalty and you are probably sick of paying such a high monthly payment. You'll be able to get more money for a lower interest rate and you'll be gratified to see all that hard work repairing your credit paying off. Enjoy the benefits of repairing your credit by refinancing your mortgage with a reputable online lender.

Source: LowerMyBills.com

Posted at 02:16 AM | Permalink

With real estate prices at record levels throughout much of the country, would you believe there are still some home bargains waiting to be found? How about a three-bedroom Kansas City, Mo., bungalow for $22,000? Or a two-story river-view Victorian in Jonesville, N.C., for $19,000?

Still too rich for your blood? Maybe you'd be interested in a traditional New England farmhouse for, say, $1. Yes, you read that right: A home that costs a single George Washington, one dollar.

The price might sound like a scam, but it's not, although strings the size of tow ropes are often attached. And, to be sure, it's going to take more of a search than looking in the classifieds or checking your local real estate office listings online. But such fabulous finds are out there -- all you have to do is find them.

The march of history

For example, every so often, the Town of Norfolk, Mass., sells historic homes for $1 each. The catch is that anyone interested in buying the homes must be willing to move them elsewhere. In most cases, current owners want to build new construction on the lots, and will demolish the existing homes unless they can get someone to relocate them.

"In Norfolk, we have what's called a 'demolition delay bylaw,'" says Bill Domineau, chairman of Norfolk's historical commission. "If a home is determined to have some historic value, we can require the owners to hold off on destroying it for at least six months." During that period, town and historic commission officials try to interest someone in moving the home to a new lot or, at the very least, dismantling historic details -- from crown moldings to pine floor boards -- for sale or use in other homes.

Most sellers in this kind of situation actually don't mind offering up the homes for $1, since they get out of paying for the demolition. Prospective homeowners or investors also get a heck of a deal in the process. And historic home aficionados such as Domineau are happy to see any part of an old home saved from the wrecking ball. "It's a win-win-win situation," he says.

Finding hidden gems

Sharon Hinson and Marjorie Ellena share Domineau's passion for saving homes -- and love watching homeowners get a bargain in the process. The two women run HistoricProperties.com, a site that currently lists about 750 residential homes and commercial buildings for sale throughout the United States that are 50 years old or older. Listings are updated daily and include many $1 homes and others that actually are free for the taking. Commercial sellers pay to be listed on the site, but Hinson and Ellena offer free listings to historic preservation groups, nonprofits and governmental agencies.

The houses on their site are bargains for many reasons, says Hinson. "Some homes need to be moved because local authorities are expanding public projects, such as highways, in the areas the homes are located," says Hinson. In addition to being listed on a site such as HistoricProperties.com, these real estate deals are usually advertised locally.

In August 2005, for example, the Houston Airport System put up an entire neighborhood of homes for sale at $1 each. The airport had purchased the homes from their owners in preparation for an expansion project. None of the homes have sold yet because the city and the airport authority considered using the houses for Hurricane Katrina victims. Buyers of the Houston homes will be required to move the structures off the land.

Homes also come up for sale at bargain prices when cities or neighborhood redevelopment groups begin improving urban areas that have been neglected. "When these groups offer houses for sale, they're often not in horrendous shape," says Hinson. "The organization simply offers the houses at great prices as an incentive to bring in new owners."

However, many other homes are what Hinson calls "project homes." Often listed at bargain prices of $1,000 to $35,000, these structures stay on their current sites but usually need extensive renovation. Interested buyers can search specifically for these deals by selecting "project homes" as a search option on HistoricProperties.com's "Find a Home" page. Buyers can -- and should -- make their purchase of the home contingent upon the findings of an independent home inspection. "It's fine to buy a home 'as is,' but you still need to know what is," says Realtor Rick Harris of Coldwell Banker ProWest Realty in Ashland, Ore. "In other words, you should always know what kind of potential problems you're buying."

A few dollars more

In most cases, bargain and "dollar" homes will require extra cash infusions. However, you can still end up with a good deal if you shop like a savvy consumer and work with an experienced real estate agent who can help you ask the right questions about the property, advises Harris.

Some questions to consider:

• How much work are you willing to do yourself? Renovating a fixer-upper can be a huge job. If you don't have the time or skills to do the work, spiffing up the house could get pricey. Be sure you have plenty of cash reserves.
• Does the home have environmental problems that must be fixed? Examples include asbestos or lead paint. Get general estimates for fixing these problems before you bid on the home. They may be more costly than you think. If you decide to go ahead with the purchase, your real estate agent or lender may be able to help you obtain special financing for the repairs.
• Does the home have valuable historic details? Older homes often are blessed with elements such as glass doorknobs and built-in cabinetry. Many of these items would be expensive to buy or build new, and can make the bargain home worth its weight in gold -- even after you pay for rehabilitation work.
• If you plan to move the home, is a lot immediately available in your price range? Depending on the situation, a seller who wants you to move a home may give you a deadline of 90 days or fewer. Be ready to move quickly. Also, remember that some prime lots might be as expensive as an entire home, so your cheapie home may quickly become more expensive than you anticipated.
• How easy is the house to move? Structural moving companies can give you great advice. Depending on your area of the country, moving a basic home can cost anywhere from $10,000 to $25,000, says Christy Settle, vice president and part owner of Northwest Structural Movers. Taller homes cost more. "Houses that are more than one story will carry additional costs of up to $10,000 for wire moves," she explains. "We actually have to get utility companies to move power lines and traffic lights so the house and flat-bed moving truck that's carrying it can fit down the roads."

Settle says older homes are easier to move than new construction, because historic homes were so solidly built. Expect to pay a little extra to secure brick chimneys or facing. Don't even consider relocating a brick house; it won't survive the move.

Source: Teri Cettina, Bankrate.com

Posted at 02:08 AM | Permalink

After looking at all the costs involved in buying house, you may have begun to have second thoughts: Perhaps, it is better to rent a home.

Real estate in most areas today is not a top investment compared with investment securities. "You're not going to get a 30 percent return on your house," said Steve O'Connor, senior director of residential finance at the Mortgage Bankers Association of America. In the past decade, people have been advised to think of a home "as shelter not investment" O'Connor said. "Wealth accumulation is secondary."

Still, as shelter, most experts say if you can afford the down payment, it makes sense to buy your home rather than rent it. That's because you can deduct mortgage interest on income tax and build equity in your property. This is especially true when mortgage interest rates are low. Mortgage interest rates are deductible up to a $100,000 annual limit.

Example

A homeowner has a gross annual income of $40,000. The monthly mortgage payment is $1,000 on a 30-year mortgage. In the first few years, 80 percent of that payment goes to interest and is therefore tax deductible. In the 15 percent tax bracket, the homeowner saved about $375 more in taxes with the home provision versus with only a standard deduction.

Lease-Purchase Agreements

Some people take a middle road. They ease into homeownership by renting a house or condominium with an option to buy.

• Lease-purchase gives a buyer time to save for a down payment or to clean up a credit history.
• It can work in a buyer's favor in areas where real estate values are rising quickly at a rate of 10 percent a year. A buyer benefits from this appreciation because the purchase price of the home is locked in on the day the buyer signed the rent-to-own contract with the seller.
• In most agreements, the seller allows a portion of the rent to be applied towards the purchase price, which some lenders consider to be part of the down payment. The amount of rent credited could be 10 percent to 100 percent, based on your contract.
• Most rent-to-own options require some down payment to secure the agreement, which is not refundable in case the renter decides not to buy.

Homeowners who would agree to a lease-purchase option include people who have had property on the market longer than they wish or owners who had to move and want the house to be lived in. The owner benefits with rental income to help pay the carrying costs of the home, and the strong possibility of selling the house when the contract expires.

Source: Yahoo! Finance

Posted at 02:06 AM | Permalink

A mortgage is basically a long-term loan that you arrange through a bank or other financial institution, or even through the seller of the property. The house and/or property serve as collateral for the loan.

A home mortgage is most likely the largest debt you will assume. You typically pay off that debt in monthly payments over a long period of time, most often 15 to 30 years.

What's In a Payment?

A monthly mortgage payment typically includes the following, known as PITI:

• Principal
• Interest
• Real estate Taxes
• Property Insurance and, often, private mortgage insurance, known as PMI.

PMI gives the lender protection if the homeowner should default on the loan. The mortgage company charges insurance if the down payment is less than 20 percent of the sale price or appraised value. PMI usually can be eliminated once the principal balance of the mortgage reaches 80 percent of the sale price or appraised value, which is known as the loan-to-value (LTV) ratio.

The process of paying the principal takes years because mortgages are based on a repayment plan called amortization. During the years of the mortgage, a homeowner pays a lot of money toward interest in order to have manageable monthly payments on the huge house debt. During the first few years, most of the mortgage payments will be applied toward the interest. During the final years of the loan, the payments will be applied primarily to the remaining principal.

Example

Let's look at a $100,000 mortgage, at a fixed interest rate of 7.5 percent, for 30 years. In three decades, the homeowner would pay $151,717 in interest.

Of course, you cannot put a price on the pleasure of living in your own home and building equity, an unencumbered interest in your property. Equity grows as you pay off the principal of the mortgage and as the property appreciates in value. Also, there are tax incentives, since mortgage interest is a deduction on your federal income tax.

Still, the amount of interest you will pay may affect your decision on what type of mortgage you choose.

Source: Yahoo! Finance

Posted at 11:22 PM | Permalink