Tag Archive: Mortgage loan


          During the Loan Process you will be asked a lot of questions, and a credit check is required. But don’t let this scare you! Many people are unsure about the process you go through to buy a home. It is not a scary process at all, but there are some do’s and don’ts you need to be aware of to keep your credit in good standing.

DO Stay Current On Existing Accounts: One 30-day notice can cost you.

DO Continue To Use Your Credit As Normal: Changing your pattern will raise a red flag and lower your credit score.

DO Call Your Mortgage Professional before you make any address or credit changes.

DON’T Apply For New Credit: Every time you have your credit pulled by a potential creditor or lender, you can lose points from you credit score. This also includes co-signing for a loan.

DON’T Max Out Credit Cards: Try to keep your credit card balances 30% below their limit during the loan process. If you pay down balances, do it across the board.

DON’T Consolidate Your Debt: When you combine all of your debt onto one or two credit cards, it will appear that you are “maxed out” on that card and you will be penalized.

DON’T Close Credit Card Accounts: If you close a credit card account, it may seem that your debt ratio has gone up. Closing a card will affect other factors in the score, including credit history.

DON’T Pay Off Collections Or “Charge Offs”: If you want to pay them off, do it through escrow at closing.

Costs for First Time Buyers

The 203k Mortgage

English: mortgages Green Bay, WI

 

Real estate consumers today can find ample value in distressed homes – properties that are under a foreclosure order or up for short sale. In many cases, however, “distressed” speaks more for the condition of the homes than their recent financial histories, as they’ve sat empty for extended periods and have been subject to vandalism and theft.

 

Those considering homes in need of repair and renovation should consider a 203k mortgage, which enables homebuyers to finance both the acquisition and rehabilitation of the property with just one loan.

 

FHA 203k purchase loans are the perfect financing vehicle for homeowners seeking the value proposition offered by REO homes,” said David Wind, president and board chairman of White Plains, N.Y.-based Guaranteed Home Mortgage Company, in a company statement this June. “Home buyers’ ‘perfect’ home can be purchased in less than perfect condition with a single-close loan product that allows repairs and remodeling.”

 

There are two types of 203k loans: the 203k streamline and the full 203k. The 203k streamline is the most popular among homebuyers and lenders.

 

“The maximum allowable in repairs is $35,000 under the 203k streamline and it does not allow any structural repairs to be done to the home, unless [the repairs are] a result of an unforeseen circumstance,” explained David Krushinsky, a certified mortgage planning specialist for Mesa, Ariz.-based AmeriFirst Financial Inc. “The full 203k allows structural repairs and will allow the buyer to exceed the $35,000 in home repairs. Both loans allow up to $1,500 in swimming pool repairs.”

 

Contractors chosen to perform repairs must be licensed, bonded and insured, and they usually must provide the lender with a resume and two client-reference letters.

 

“After the close of escrow is when all the rehabilitation work begins,” said Krushinsky. “Funds usually aren’t released immediately so it’s important for your contractor to start work in a timely manner. Typically, if they’ve been in business, they have existing relationships with vendors so they can order materials and begin work. If not, the project may take longer than anticipated.”

 

Since the 203k mortgage is based on the home’s potential value after repairs — not its existing value — you can be approved for a higher loan amount. The mortgages also carry long-term-fixed rates, are insured as soon as they fund, and include escrow accounts for the scheduled repairs.

 

Loan amounts are capped according to local FHA limits. Only owner-occupied properties of one to four units qualify for 203k mortgage financing; homes also must be at least one year old.

 

Prudential Showcase Properties is an independently owned and operated broker member of BRER Affiliates LLC. Prudential, the Prudential logo and the Rock symbol are registered service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. Used under license with no other affiliation with Prudential. Equal Housing Opportunity.

 

Improve Your Credit Score

Factors contributing to someone's credit score...

Factors contributing to someone’s credit score, for Credit score (United States). (Photo credit: Wikipedia)

Those about to start house hunting should check their credit score before things get too serious. There is nothing quite as frightening in the mortgage process as learning that your credit report contains a late payment or other blemishes that can prevent you from buying a property.

The higher your credit score, the better your chances are of financing a home. A credit score of at least 620 will give consumers a fighting chance to secure a home loan; 720 should qualify in most cases.

However, a lower credit score doesn’t necessarily mean you can’t finance a home. Credit score repair begins with your credit report. You can request a free copy of your credit report annually from the Federal Trade Commission at AnnualCreditReport.com. Check the report for errors.

Don’t panic if your report contains blemishes. There are steps you can take to fix negative marks, regardless of whether the marks are in error or if you’ve missed a payment or two. The simplest thing to do if you’ve missed a payment is to call the creditor and ask them to erase the negative listing. You can also do this with a well-documented letter. There is no guarantee that a lender will do this, but if you’ve been a good customer through the years, this method has proven to be successful.

If you are one of the many who have defaulted on a student loan you can enter into a “rehab program,” which will get your account back on track after 12 months. This may not be the quick fix you need when buying a home but the sooner you do this the better.

For disputing a negative mark that was not your fault, you can try disputing the account with the credit bureaus as “not mine.”

One quick fix used by borrowers to boost their credit score is to have an older family member with a sound credit rating add you as an authorized user on a credit card. This can help increase your score and you wouldn’t even need the card in your possession.

With more loans requiring higher credit scores today, it’s never too early to start fixing credit challenges.

Prudential Showcase Properties is an independently owned and operated broker member of BRER Affiliates Inc. Prudential, the Prudential logo and the Rock symbol are registered service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. Used under license with no other affiliation with Prudential. Equal Housing Opportunity.

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