Home Mortgage Foreclosures
January 24, 2010 by · Leave a Comment
Sadly many are experiencing Home Mortgage Foreclosures. A legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.
A foreclosure on your credit history does not have to stop you from getting the financing you seek. There are still investors in the non-conforming arena that will consider doing a new purchase or refinance (called a foreclosure bail-out loan) even one day out of foreclosure (or in foreclosure proceedings in the case of a refinance). You will have to keep in mind that these types of lenders will charge higher interest rates and fees, as well as expect there to be generally at least 30% equity in the home depending how your credit history works out.
Before a Foreclosure proceeding, a Notice of Default (NOD) must be sent out to the homeowner. It notifies the homeowner that unless back payments are brought current within a time frame (at least 30 days), the bank would initiate a Foreclosure process.
Foreclosure begins with the filing of the Notice of Trustee Sale (NTS), which states when and where the property is to be sold. By law, the foreclosure sale must be advertised on newspapers several times before the scheduled sale. The NTS is sent to the homeowner, alerting him that the property is now in foreclosure. The NTS also itemizes the amount owed, plus attorney fees and other charges.
Foreclosure is legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms and conditions in the mortgage contract. The foreclosure procedure brings the rights and obligations of all parties to a final conclusion and passes the title in the mortgaged property to either the holder of the mortgage or a third party who has the option to purchase the property at the foreclosure sale. At this point the property is free of all the past encumbrances affecting the property subsequent to the mortgage.
When a Notice of Foreclosure is served, a homeowner has basically three options.
Bankruptcy- Filing bankruptcy delays the mortgage repayment. It does not eliminate the debt. Therefore, it is only a temporary measure.
Sell the property- While selling the home and pay off the mortgage effectively eliminates the debt, in a soft real estate market, the homeowner may have to sell the property at a distressed price to keep within the time frame of the foreclosure proceeding.
Refinance- The homeowner can also refinance and pay off the current mortgage. As long as the homeowner has enough equity built in the home, many lenders are willing to finance the property to help the owner out of foreclosure.
The last two methods would save the homeowner’s credit ratings. After the homeowner has a chance to attend to his financial matters, he can purchase another home when he feels ready.
Many lenders will count 120 day lates on your credit a foreclosure, even if a NOD was never received.
Depending on the state the property is in and thereby the types of security instruments, Mortgage or Deeds of Trusts, the lender may or may not have to go to court to foreclose upon the property. In state where trust deeds are used, because titles to properties are held by the lenders, lenders do not have to go through court proceedings to foreclose on properties. In states where mortgages are used as security instruments, banks must go through court proceedings.
When you are 90 days late the lender will file a notice of default onto the title of your house to start the foreclosure proceedings on your house. At this time you have a short amount of time to bring your mortgage current on all the late payments otherwise your house will be sold.
The foreclosure process is not immediate. If your house is in foreclosure, you do have options.
Normally when a home goes into foreclosure there are many legal fees that are associated. Keep this in mind if you plan to try and sell the home or if you try to refinance out of the foreclosure. You should obtain a payoff statement to check and see how much is owed to payoff the mortgage completely.
A legal process to enforce a lien, by the selling of property, to satisfy the debt.
It is important to know that foreclosure is not automatic. Due to the high cost of foreclosure to lenders some of them will try to work with you to find other options especially if they feel you can provide a valid solution to the problem.
This will usually happen when you are three or more months late on your mortgage
The most important part of having a home in foreclosure is to do something, anything. Sitting still will not make the problem go away. Call your lender and speak with their homeowner’s assistance department. This will at least give you the chance to save your home. Many times you will be surprised by what the lender is willing to do.
A borrower facing foreclosure may seek a foreclosure bailout. This is a loan from a lender that specializes in stopping the foreclosure process. These loans can be expensive, with a rate of 11.99 to 13.99% and two or three points in origination fees. The foreclosure bailout will allow the borrower to rebuild their credit history, and refinance in the future at a much lower rate.
An increasing cause of foreclosure is the violation of the due on sale clause. This results from selling the property and not having the lender’s approval to do so. For example if you did a contract for deed and did not get approval from the lender. Foreclosures in this case is rare but investors that do a lot of these types of transactions are running into this. Also a lease option is considered a sale.
Not only does your mortgage company holding the note on your property have the right to foreclose but also your taxing authority may do the same. If you do not pay your property taxes then the taxing authority can foreclose. If this happens there is usually a redemption period which allows your to pay the debt along with fees and interest. Different states will have different methods for this process. One way is to sell what they call a tax certificate then after a set time period the investor who bought the certificate will get the deed to the property. The other way is where the investor acquires the deed at the auction but will not be able to sell the property until after the redemption period.
There are different options to get out of foreclosure. Refinance your mortgage or a lease buyback program. Typically you will need at least 25% equity to refinance out of foreclosure and sometimes more depending on your credit scores. Or a private investor can buy your home from you and lease it back to you for a set period of time. In that time you are to get your credit to the point where you can purchase the home back from the investor.
If for any reason you are having difficulties or problems making your monthly mortgage payments, call, write or otherwise contact your mortgage company as soon as possible. Your lender wants to help you avoid foreclosure, so explain your situation clearly and honestly. Have your key and actual financial information ready, such as your income and expenses as well, as this information may be necessary for the lender to offer you assistance.
When faced with letters from your lender, it is important not to ignore letters notifying you of late payments, default, or otherwise describing delinquency on your mortgage payments.
Improve Your Credit Score One Step at a Time
January 24, 2010 by · Leave a Comment
If you plan to apply for a mortgage or a loan in the future but you have had credit problems in the past then you need to improve your credit score before you can do anything else.
Your credit score is a very important number. Every time you apply for any kind of financial assistance a lender will take a look at your credit score. If you are approved for credit then the number will play a role in the terms of the loan and the interest rate.
A higher credit score is much more advantageous than is a lower one. If you have a lower score you may be approved for credit but you will have a higher interest rate because the lender considers you to be a high risk. This is one reason that you need to work as hard as possible to improve your credit score.
Before you can figure out how to improve your credit score it helps to understand what it is made up of. Your credit score is made up of five specific areas:
· Payment history makes up 35 percent
· Your debts make up 30 percent
· The length of your credit history accounts for 15 percent
· New credit makes up 10 percent
· The credit that you are using at present accounts for 10 percent
In order to improve your credit score one of the most important things you can do is to get into a habit of paying all of your bills on time. This is the most vital aspect that plays a role in your credit score. If you have any payment that is past due by 30 days or more then this can be a black mark on your credit rating. Negative marks such as this can show on your credit report for as long a period as seven years. Don’t let this happen to you. If you want to improve your credit score then pay all of your bills on time. Do not let a credit card bill or utility bill cause you problems with your credit.
The money you owe on any given debt makes a difference in your credit score. To improve your credit score do not live beyond your means. Do not overuse credit and do not borrow more money than you can afford to pay back in the allotted period of time.
If you presently have a great deal of debt then it would do you well to take steps to cut back on extravagant spending. To improve your credit score you must become responsible financially. Pay your bills in a timely way. Pull up your financial straps and improve your credit score. Take it one step at a time and you will find that you are making progress.
Bad Credit Mortgages
January 24, 2010 by · Leave a Comment
There are many programs available for individuals with bad credit. Typically, the interest rates are higher than other programs for people with good credit. A competent mortgage broker should be able to give you your options.
Many people have bad credit because they are simply over extended. They have have lower credit scores due to carrying heavy loads of debt and sometimes missing payments because they have so many monthly payments. By using your mortgage to consolidate debt, you can improve your credit score. In this case a bad credit mortgage actually becomes a tool to improve your credit score.
Banks assess default risks primarily by credit history, capability to repay the loan, and the amount in relation to the value of the property the home buyer puts towards the house. As long as one can demonstrate enough income and sufficient down payment, bad credit profile usually is not a problem getting a mortgage.
I think there are more lenders working on loans for people with less than perfect credit than for those with perfect credit…Probably because if you have perfect credit, you are the exception, not the rule…
Some people with bad credit count themselves out of the game before having their credit reviewed by a qualified mortgage professional. With the many sources mortgage brokers have available to them they may be able to get you the financing you want now rather than having to wait. The only way one can be sure of what is available for you is to have a mortgage broker consult with you abuot your credit situation and make recommendations as to what the best possible course of action might be.
If you have been told that you have bad credit, don’t think that you don’t have any options. People with bad credit typically have FICO scores which are 620 and below. Missed payments on credit cards, installment loans, mortgages, or any public records also affect credit in a negative manner.
Luckily, many mortgage professionals are affiliated with lenders who help individuals and families who have found themselves in a tight situation. These lenders present loan options which are very flexible and allow people to utilize their home’s equity as a compensating factor for their bad credit situation.
There are also loans available for people who have been delinquent on their mortgage payment. You may still qualify for a loan even if a notice of default has been filed on your property. Consult with your mortgage professional to review your options.
Many people are fed up with renting and feel that their credit situation is keeping them from a home loan. If you feel this way, you are definitely not alone. Thousands of individuals and families across the US think that they are stuck in a rental due to bad credit. The good news is that, in many of these cases, the individuals think that their situation is much worse that it truly is.
Lenders are getting more and more aggressive and coming up with new types of financing each year. This is allowing many Americans to be able to buy a home with no money down and even if they have bad credit. Consult your mortgage professional to find out what options you have and how much of a home you will qualify for. Even if you can not qualify for the financing you desire or require at this time, a good mortgage professional will be able to let you know what can be done in order to qualify for the financing you need in the near future.
If you are looking for a bad credit loan, your best bet is to talk to a mortgage broker, not a bank. Banks will almost certainly turn you down, whereas mortgage brokers have access to hundreds of lenders and can find some that would fit your circumstances.
Perfect Credit And Home Mortgages
January 24, 2010 by · Leave a Comment
In a perfect world you would have perfect credit and applying for a mortgage would be well, perfect. Approval would take seconds and interest rates would be negligible. That is in a perfect world. Most everyone we talk to is not perfect and has not been for some time so where do we go from here?
Do you need perfect credit to get a mortgage? – No. Imagine if perfect credit was required. Few loans would be made and every lender in town would be bankrupt.
Perfect credit is not needed to get a mortgage. Home ownership today is higher than ever before because loans are being extended to more borrowers. Contact your mortgage broker to find the loan that is right for you.
You do not need perfect credit. However if you want the “perfect” loan then perfect credit definitely helps. Discuss your needs with a broker you trust.
You can obtain a mortgage loan with almost any type of credit. However, the worse the credit the more you will be required to put down as a down payment for a purchase transaction and the higher the interest rate you are more likely to pay. Sometimes compensating factors such as a lot of documented liquid assets, great job time, and a very low DTI (Debt to Income Ratio ) may help to slightly compensate for a lower credit score.
Perfect credit is not needed to get a mortgage because most lenders do not judge borrowers on credit alone. Although, credit is a big factor when applying for a mortgage each lender has different criteria to be approved for a mortgage. Lenders also take into account a borrower’s mortgage/rental history, employment history, and other factors. There are many lenders that target borrowers with less than perfect credit which is called sub-prime lending.
Many lenders specialize in people with less than perfect credit. With the loan programs available in todays market most people can purchase a home.
There are many different types of mortgages that you will be able to get without perfect credit. Some programs use the credit score only, only the mortgage history, and some will even disregard collections and judgments allowing them to exist without having to pay them off.
If you are thinking about buying a home but you are not quite sure if you can qualify then it might make sense for you to contact a mortgage broker. A good mortgage professional will not only look at your credit but will also look at your complete financial picture to see what makes sense for your current situation. They will also make recommendations on what programs will be available for your situation. If you are unable to obtain a mortgage now a mortgage professional will help guide you through what needs to be accomplished so you can qualify real soon.
There are some lenders that do not even look at FICO scores. This is because sometimes people have not established any credit , but yet will still make rental payments and utility payments on time. These various payment histories will appear on an individuals credit report.
There is no such thing as ‘perfect credit’ . All consumers who have a credit rating fall into either ‘conforming’ or ’sub prime’ financing category. There are even programs for first time borrowers who have no credit history.
However, some consumers who have had difficulty meeting their commitments may have credit so damaged that they could be asked to raise their credit score to qualify .
If you have poor credit ou should strive to improve your credit rating after securing a mortgage. This will allow you to refinance at a conforming rate and save you money every month.
When banks underwrite a mortgage application, there are four major factors they consider. Credit history is only one of four. Lenders also examine the loan applicant’s ability to repay the loan, the homeowner’s asset reserves, and the loan amount in relation to the property value, in other words, how much is the homeowner putting up in the property. With one or more of the other three factors being above average, even a home buyer with below average credit profile can easily obtain a mortgage.
Even if you have filed for bankruptcy or are currently in foreclosure, contact us about refinancing your property. You do not need perfect credit, even bad credit is OK with us because we have thousands of loan programs for borrowers of all credit types.
Many mortgage loans programs are available to borrowers with less than perfect credit. One thing to consider when obtaining a loan with less than perfect credit: The borrower can usually get a better interest rate by getting a 2 or 3 year fixed product rather than the traditional 30 year fixed. This makes good sense because once the credit is repaired 2 or 3 years down the road the borrower will most likely want to refinance into a lower interest “A” paper type loan.
Some other factors that lenders will look at is the borrower’s payment history on an existing mortgage as well as rental history. The better the payment history, meaning no late payments greater than 30 days, you will qualify for a lower interest rate and higher loan amount.
Lower Mortgage Rates By Raising Credit Scores
January 23, 2010 by · Leave a Comment
Credit card management can become complicated the more that you have. Securing the lowest mortgage rates depends on proper credit card management. Keeping track of each can prove to be a daunting task because the balances are all different. You can sometimes take the balance from one card and place it onto another credit card. You may be looking to have your limit raised on one card while you are paying off another, or closing one account all together.
In order to keep your credit cards at a manageable place, keep all balances to less than 50% of what your credit limit has been set at. If you go beyond this then you could run into problems paying back the money and also this could adversely affect your credit score. To improve your credit score further if you pay off a credit card and decide to not use it again then keep it open as the zero balance on a current account looks good on your credit report.
If you have a number of credit cards you might want to downsize. It is better to keep the cards with the lowest interest rates and the ones that have the longest histories. Remember that many things play a role in regards to your credit score including the balances you carry, your payment history and how long you have been a cardholder.
If you would like your balance to be on par with your credit limit ratio within the acceptable 50% mark then you can ask the credit card company if they would be willing to raises your credit limit. This can have a positive impact on your credit score but does not mean that you should start charging up a storm with the extra credit you have been extended. Common sense and smart money savvy are very important here.
One way that you can decrease your utilization ratio is by reducing your balance. You can also do the same thing by increasing your balance. If you have an excellent record of paying your card on time then having your balance increased should be something that the creditor is willing to accommodate.
In order to increase your credit score, you should use your credit card on a regular basis but then pay it off in full every month. This establishes a good payment record which is what you want.
In order to maximize your credit score, having anywhere from two to four credit cards in your possession should suffice. Make sure the balances of each are 20 to 39% of what your maximum ideal is.
Be responsible with your credit cards. Don’t use your credit card for any frivolous purchases but instead save for emergencies. You wouldn’t want to use your card for a night on the town only to encounter a family emergency and have no credit left to help you cope with the emergency!
Speak to your mortgage consultant in order to figure out the most appropriate ways for you to bring your credit score up. You can improve your score by paying your credit card bill on time every month, paying more than the minimum, paying off the card as soon as possible and not constantly applying for new cards. While most creditors do not report late payments to the credit bureaus until the payment has been in default for 30 days, you may then end up with a late fee. If you have a history of late payments this can serve to damage your credit score even more.
One thing that you might want to do is to get a hold of the free annual credit report offered at Annual Credit Report and from there begin to improve your credit score. Be aware that this is the only FTC approved credit reporting site.
If you don’t know the interest rates on your credit cards then find out right away. Every six months or thereabouts give your credit card company a call to inquire about getting a lower interest rate. This can save you money on a monthly basis.
The most open accounts you should have to benefit your credit score is five. This includes not only credit cards but also personal loans, student loans, car loans, etc.
To manage your credit cards to the best of your ability, you should pay them off as quickly as possible. You can always refinance your mortgage and then take the money and use it to pay off a loan if you like.
