Category: Mortgage loans

Do You Know The Mortgage Mistakes You Must Learn To Avoid?

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Homebuyers tend to make a lot of mistakes way before they start looking for a mortgage lender. These mistakes can ruin the chances of any homebuyer of qualifying for a mortgage. Outlined are mistakes you must avoid so as to qualify for a mortgage:

Closing that unused credit card

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At times it may seem like a good idea to close a credit card that you no longer use, but in the real sense that does more harm than good. For example, if you own five credit cards and each has a credit limit of three thousand dollars that shows that you have a total of fifteen thousand dollars available credit. If you close one credit card your available credit reduces to twelve thousand dollars. If you happen to have five thousand dollar credit card debt, five thousand dollar credit on fifteen thousand dollars will look better, according to lenders than in the case of twelve thousand available credits.

Making a big purchase

If you are planning to apply for a mortgage, you must resist any urge of making a big purchase. Do not go loading your credit card with the charge of an entire living room set of seats. This not only makes it hard for lenders to work with you, but also throws your debt-to-income ratio out of proportion. Lenders are comfortable working with someone whose total monthly debts do not exceed forty three percent of their gross monthly income.

Changing jobs

Most mortgage lenders prefer that you have a stable job and you have been working for at least two years, this assures them of your stability. If you change jobs before the mortgage loan closes, then you could lose the chance to qualify for a mortgage since lenders will think that you might lose the job. Loss of a job means that you will not manage to meet your monthly mortgage obligations. If you must change your job, do so after you have closed the mortgage loan.

That missed credit card payment

A credit card payment is considered late if the payment is made thirty days past the supposed due date. Once you pay your credit card late, this remains in your credit card records, causing lenders not to be so comfortable working with you. This automatically reduces your chances of qualifying for a mortgage loan.

Missing the lock period

Missing the lock period is one mistake that causes your mortgage to be quite expensive. You happen to get your hands on a good interest rate and you even pay extra so as to ensure that the lender locks the rate. The problem kicks in when you delay in providing the required paperwork to the lender to such an extent that the interest-rate lock expires. In such a case the interest rate rises, causing a rise in your loan payment each month. Ensure that you have all the required paperwork ready before you start on the loan application process this will help you save time and money.

Mortgage loans are supposed to ease the financial burden of any homebuyer, ensure that you avoid the mistakes mentioned above and you will be having no reason not to qualify for a mortgage loan.

Categories: Mortgage loans

Do You Know The Differences Between Pre-Qualification And Pre-Approval For Mortgages?

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Before you go out shopping for a mortgage, there are two significant concepts that you need to understand and differentiate as each will determine your position in the real estate market. These are pre-qualification and pre-approval, and in most cases you may confuse the two since they are close in meaning and yet different in implications. Generally, you must be able to tell the difference between pre-qualified and pre-approved if you intend to make the most out of your mortgage experience.

So, what is prequalification?

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Before you start looking into a mortgage as a way of financing your purchase of a home, it is important to get an overview of your financial position with respect to what you can or cannot afford in as far as the mortgage is concerned. Most lenders consider one’s income, available assets and debts during a pre-qualification assessment. This means that there are no details involved and thus the outcome is only general, especially considering that most lenders actually conduct these assessments over the phone or by email.

The idea of a prequalification is to give you a rough estimate of what you may be able to get if you apply for a mortgage. You may notice that being the first step towards acquiring that mortgage, prequalification is usually free and it does not require an application. All you have to do is contact your lender and provide some basic information regarding your financial position.

Pre-approval takes a little more to achieve

Unlike prequalification, pre-approval requires more than the self-reported financial position of the client. Here, the lender will require you to possibly pay an application fee and fill out a mortgage application form. Once they have all the necessary information, they are expected to evaluate your ability to pay that mortgage and in most cases this includes an analysis of your credit rating. You will for example not just be expected to list your assets, but rather also to provide documents that prove your ownership of the said assets.

A pre-approval is more of a final look at your financial position before the lender agrees to pay for your home. Consequently, if you have a pre-approval, you are more likely to get a good deal since the seller is assured that you can access the required funding. Sellers are actually more attracted to buyers who have the money at hand or a pre-approval from their lender of choice.

A pre-approval is much more solid than a prequalification because the pre-approval implies that you have the lender’s blessing to find a house within the given price range. If you get a pre-approval, you are more likely to get that mortgage approved, and thus you will be able to buy that property faster and easier compared to when you only have the prequalification. The pre-qualification is only an estimate of what a lender may be willing to offer you in case you apply for a mortgage. In case of any questions regarding mortgages, you can always contact us and we will be thrilled to engage you with our ideas and solutions.

Categories: Mortgage loans

Mortgage loans come with convenience and benefits

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Buying a house is a dream that everyone possesses but when one looks at the high realty rates, an average person is fearful of even broaching the topic. But today, financial institutions have opened up many ways to make financial hurdles easier for the common man. One such initiative is a mortgage loan.

The basic idea of these financial loans

To put it simply, this loan can be acquired by buyers of a real estate property to raise funds to buy the property or by the owners to raise money for any other need. The bank gives the loan applicant at least 80 percent of the cost of the property as the loan and this loan has to be paid back with the interest that has been agreed upon mutually.

In both the cases, the person who avails the loan has to secure his or her property to get the loan. In the case of the mortgage not paid on time, the lender acquires full right to the property.

The working of these loans

These loans work like any other loan. But a borrower of a these loans may have to pay many related fees such as closing costs, etc.

The down payment for this loan can be decided by the borrower. The interest rate for the loan is reduced depending on the lump sum amount he or she has paid. Monthly mortgage payment that the borrower has to pay is decided upon four main factors, abbreviate as PITI, which stands for Principal Interest Taxes Insurance.

The Principal is the loan amount the borrower gets from the bank and this amount is fixed after deducting the down payment.

Interest is the rate charged on the loan.

Taxes is the money the borrower has to pay for the property taxes and it is put into an account referred to as anescrow, which is a third-party that collects the taxes till it is due.

Insurance is what the borrower has to purchase as a precaution against any damage to the property that might occur in future.

Benefits of these financial loans

Helps purchase of homes easy and affordable:  Since the period of the loan can stretch up to 30 years, it is convenient and affordable for the borrowers to pay off the loan gradually. The amount that needs to be paid every month is affordable and it does not put an extra financial burden on the borrower.

These loans are cost effective: When it comes to monthly interest, the interest is much lower than others because the loan is secured against the property of the borrower.

Easy availability of cash:  Another advantage of these loans is that one can avail easy cash for any other requirements such as home revamping, medical bills or even for college tuition fees.

Additional tax exemption: Those who have availed for these loans is eligible for tax deduction and even the interest on the loans that the borrower is expected to pay every month can also be tax deductible.  Even the insurance that the borrower has to purchase can also be eligible for tax deduction.

Categories: Mortgage loans