Best Home Loan Review

Manufactured home loans for prospective homebuyers with bad credit

noreply@blogger.com (Rich Dad) — Mon, 22 Feb 2010 23:07:02 PST

If you’re suffering from poor credit and thinking about buying a manufactured home, then you can go for a bad credit manufactured home loan. Manufactured home loans for people with bad credit are now being offered by a number of mobile home lenders.

These loans are easy to get and can help you boost your credit score as well. Many prospective homebuyers’s who can’t buy traditional homes due to their credit problems frequently select manufactured homes. A bad credit mobile home loan has some similarities with a conventional mortgage loan.

How can you get bad credit manufactured home loans?

Manufactured homes or mobile homes are normally financed like personal loans instead of real estate loans. The financing procedure is similar to that of a television or a car. However, due to the growing popularity of mobile homes, financing of mobile homes has achieved plenty of market.
To get a manufactured home loan, you typically need to have a good credit. At present, people with poor credit scores can qualify for these loans at a somewhat higher interest rate. Nevertheless, you would need to substantiate that you have a steady source of income and repayment ability to qualify for a bad credit mobile home loan. Lenders might necessitate you to own the lot where the mobile home is to be placed.

There are various lenders that offer loans for both the mobile home and the lot. On the other hand, there are lenders that just offer loans for the mobile home where you have to arrange for the lot by yourself.
Options for bad credit mobile home loans

The package for mobile home financing comes with various features such as adjustable or fixed interest rates, single permanent construction loans and finance of up to 95% of the home value. You can get affordable rates for short-term financing. In addition, you can get construction plans designed as per your convenience.

One of the options for financing mobile homes is the single permanent rate or one time close construction rate. This is a single step program and if you go for this option, then you can obtain a fixed interest rate throughout the construction period. Once the construction is complete, this would change into a permanent loan.

If you go for two-step option for financing mobile homes then you can take out a loan of up to 90% of the value of a vacation home and up to 95% of the value of the permanent home. This is derived from the prime rate throughout the construction period and would remain for a construction period of one year.

The third mobile home financing option is the lot loans. The lot loans are offered to people who have discovered the location to fix the manufactured home but are still to construct the home.

How to calculate debt ratio?

noreply@blogger.com (Rich Dad) — Mon, 22 Feb 2010 03:57:09 PST

Debt ratios are two numbers expressed as a percentage of your gross monthly income. The first debt ratio is called your housing ratio because it only uses your house payment (which includes your monthly tax and insurance payment) for the ratio, often also called your ‘‘front end.’’ The second ratio is your housing ratio plus any other debt listed on your credit report, divided by your gross monthly income. This is sometimes called the ‘‘back-end’’ ratio.

Common front and back ratios on conventional loans with 5 percent down are 28 percent and 36 percent. Take your gross monthly income, multiply that by 28 percent, then by using the ‘‘Cost per Thousand’’ chart in the Appendix at the back of the book you can find what a lender would consider a comfortable house payment. For example, your gross monthly income is $5,000. Remember, this is your gross income. Income before all your taxes and withholding are deducted. Let’s say that the typical housing ratio is 28 percent, historically a common housing ratio for borrowers with 5 percent down. 28 percent of $5,000 is $1,400. Included in that $1,400 is your monthly hazard insurance bill of $75 and your monthly tax payment of $125. Also note that if you put less than 20 percent down you’ll need a private mortgage insurance premium as well, which might be $85. By subtracting these amounts from your ‘‘allowable’’ $1,400, you’re left with $1,115 for your principal and interest payment.For a 30-year fixed payment of $1,115 and a note rate of 7.00 percent, the loan amount calculates to about $168,000. You’re prequalified to borrow $168,000. Give or take. Again, this is your front-end ratio.

Note that this has nothing to do with the sales price of your new home but only pertains to how much you’re going to be able to borrow. If you have a $168,000 loan amount that doesn’t mean you have a $168,000 sales price. You can have a million dollar home with just a $168,000 loan amount, as long as you have $832,000 in down payment, right?

The second ratio, or back-end ratio, is your total debt ratio and includes mostly those items that would show up on your credit report, such as automobile loans, minimum credit card payments, student loans, and the like. Other things you pay for but that are not included in your ratios are the cost of your electricity, telephone, and food. If you had a car payment of $400 and student loan payments totaling $250, then in this example your ratios would be $1,400 _ $400 _ $250 _ $2,050. Divide that by your gross income of $5,000 and your back ratio is .41, or 41 percent. Your overall ratios would be 28/41.

How to use internet to find the best mortgage rate?

noreply@blogger.com (Rich Dad) — Sun, 14 Feb 2010 18:10:21 PST

You must use it carefully. But there are some places to start. One of the best-known Web sites for interest rates in general and specifically for mortgages is BankRate Monitor, found at www.bankrate.com. BankRateMonitor both surveys area lenders for mortgage rates while at the same time providing a venue for mortgage companies—brokers as well as bankers—to advertise on the same page.

The mortgage section lets you select which major city and state your property is located in, whether you want a conforming or jumbo quote, and breaks down fixed and adjustable rate mortgages. If you live in San Diego, you would fill in your city and state, click on your mortgage requirements and, voila, lists upon lists of mortgage rate quotes. On these rate quotes you’ll see loan parameters, such as the rate, the APR, how long the rate is good for, when the rate was posted, plus any other comments lenders may add, such as, ‘‘We specialize in loans for hamster farmers!’’

One thing you’ll notice is that there are a great many lenders who advertise on the Internet, and you’ve probably never heard of most of them. Is that a bad thing? Of course not, but you do need to scrutinize these people with a tad more diligence than lenders who were referred to you by your agent or by your friends. Is Big Shot Mortgage offering an interest rate of 4.00 percent while everyone else is offering 7.00 percent? Do you think Big Shot Mortgage has a special edge on the mortgage market? Of course they don’t. But there are some ways to help qualify those companies you see advertising on the Internet.

First, visit their Web site. Easy enough, right? But you’re not looking for key terms such as ‘‘we offer great rates’’ and ‘‘we offer great service’’ or any other such patter. Instead, compare the interest rates quotes on their Web site with the ones that are advertised on the Internet. Do they match up? If they do, are they for the same date?

You can’t compare interest rates unless they’re for the same date, and even then the markets may have changed. If you get interest rates that are much different on the company’s Web site than you see advertised in other places, take their advertisement with a grain of salt.

Another thing to determine from their Web site is to see if they’re in compliance with Federal Truth in Lending laws by quoting interest rates in the correct and legal manner. If you see a rate quote, do you also see the corresponding APR quote? Do you see the loan amount used for the quote? If you see a lender or broker quoting interest rates on their Web site without complying with federal statute regarding rate quotes, you might think of moving on.

Are they operating legally in your state? Most states have licensing laws for lenders and brokers. If someone is advertising in your state, are they doing so legally? A broker’s Web site usually lists the states where they’re authorized to do business. If you find no such list or nothing about their licensing, don’t consider this lender or broker. I know this sounds a little tough, and quite frankly there are probably some very good lenders and brokers out there who might get dropped from your list because they didn’t advertise properly or disclosed their licensing authority. But think about that for a moment if you are tempted to apply with someone you’ve never heard of just because they advertise a great rate while at the same time they’re in flagrant violation of Federal Truth in Lending Laws. Do you really want to take that chance?

How has the internet helped mortgage lending?

noreply@blogger.com (Rich Dad) — Sun, 14 Feb 2010 18:04:51 PST

The Internet provides unprecedented speed and access to information. Your loan closes in a matter of days, not weeks. Because of the Internet, ‘‘Google’’ is now a real word. Because of the Internet, it takes just a few seconds to get a question answered. Encyclopedia? Ha! Nothing is as fast and as handy as the World Wide Web, right? Doing things faster and with fewer people keeps costs down and helps to keep rates lower than they otherwise might be.

By providing speed and information to the process. Speed and access to information are the two key reasons mortgage lending is so much easier today than it was just a few short years ago. Consumers now log onto a lender’s Web site and apply online. This does a couple of important things. First, it allows customers to complete applications at their convenience rather than sitting at some loan officer’s desk filling out reams of paper. Honestly, aren’t there just a few things you’d rather be doing than going to a lender’s office and fill out loan applications? Second, by completing the online application you’re also easing the workload for the lender.

It used to be that a customer would complete the loan application, sign it, and pass it on to their lender who would then take that same handwritten application and input it into a computer program. Saving your lender time means they’re (hopefully) spending more time on customer service and less time on mundane paperwork. Lenders also use the Internet daily.

From my desk I can download your loan application from our Web site, review the data, and then use the Internet to submit your loan for approval. Within a few seconds, the approval arrives, and I can then order your credit report, your title report, and your appraisal. All online. Within a few days, your title report is delivered to me electronically, as well as your appraisal, which I can download, print, or forward to you. All this takes about five minutes. Before the Internet those procedures could take hours.

Getting loan from the web

noreply@blogger.com (^_^) — Mon, 25 Jan 2010 04:03:48 PST

It seems everyone thinks the web is the be all and end all of mortgage
lending. But, there are significant differences in how the use
of the web is perceived. There are those who think the web will
be the demise of all mortgage lenders as we know them. All loans
will be submitted through a web site with a faceless, and sometimes
voiceless, lender. Or, the lender will speak to you, and may
even send you friendly emails. No more going into a lender’s office
and wasting precious time. In a perfect world, this could happen.
Of all the loans I originate each year, about one-fourth to
one-third are perfect-world loans. And most of those still need
some type of tweaking and guidance that can only be provided by
an experienced mortgage lender.

Others think the web is a fad, and borrowers will ultimately
come back to the comfort of dealing with a friendly face. The truth
lies somewhere in between. The World Wide Web is here to stay,
and it is a major tool in the mortgage lending industry. Just how it
is used is still evolving. My company has, in my humble opinion,
the best combination. We have branch offices in many states, but
not everywhere. We are always upgrading our technology to provide
the borrower with the best advances in lending. We take loan
applications face-to-face, over the telephone, and through our
web site. The big advantage is that we will always have an experienced
loan officer handling the loan. The borrower and Realtor
know where to find me. Or, as one Realtor told me recently, she
knows where to come if I mess up the loan and cause the borrower,
and her, any pain. This comment came after a web lender
delayed one of her sales significantly and the borrower ultimately
went to a local lender. Even if I take the loan by telephone or
through our web site, I will be in contact by telephone, mail, and
e-mail. If the borrower is buying locally and applying from afar,
they know I will be available in person after they move.

The website is a great tool for the borrower who does not have time, or is
too far away, to come into the office. They can apply in the middle
of the night, naked. Once the loan is downloaded, I will call them
to confirm and to get any additional information necessary for the
approval. And to make sure they are applying for the best loan to
serve their needs.

At the very least, anytime you use an on line lender, they
should meet certain standards:
1. They should be well-known, established, and wellfunded.
2. They should provide all fees and costs up front before
the borrower applies for the loan.
3. They should have experienced people handling all the
loans.
4. They should be readily accessible by telephone, at the
very least, and preferably at a local or regional office.
5. They should be familiar with the area or have a local contact
who does know the area.
6. They should have enough variety of loan products to
make sure all possible ways to finance the property are
available. And the lender needs to know how to use
them.
7. Their application site should be very user-friendly and
capable of answering basic questions. It also should have
a toll-free number to call if the borrower wants to talk to
a person before making any type of application.

There are other services that should be offered, but if they
meet the aforementioned standards the borrower will at least have
a reasonable chance of getting the best loan. But I wouldn’t count
on it. Even lenders where you can go right to the office have a hard
time getting good knowledgeable people. A lender far away and
handling a large volume of loans from a central site will not be able
to have anywhere near enough experienced personnel. I don’t
know anything about the markets in California, other than the fact
the state is slowly slipping into the Pacific. Why would you expect
someone in California to know anything about the markets in Virginia,
or the costs associated with closing a loan there?

At the time this book was revised in 2000, several on line
lenders had failed, leaving many borrowers to frantically search for
another lender. One Realtor friend of mine who lists several builder’s
houses told me he had a large number of purchasers who decided to
apply on line, and every one of the loans had been a nightmare. Of
course, most of the worst ones will eventually be weeded out. You
just want to make sure your lender has staying power.

Kind of accounts for down payment

noreply@blogger.com (^_^) — Tue, 29 Dec 2009 02:53:21 PST

Down payments must be your very own blood, sweat, and tears. Lenders want your down payment to come from your own savings or checking accounts. Other people can’t make your down payment for you, though they can help by giving a gift. Otherwise it has to come from you. There are programs that require no down payment whatsoever, or loan programs that you let you borrow your down payment, but most every loan available will require some type of down payment, which needs to come from you or a family member.

First and foremost will be the money in your bank or savings accounts. Your lender will typically ask for account statements for the preceding three or more months to verify your funds to close the deal. Why three months? A lender wants to see a pattern or history of an account. If suddenly $20,000 pops into your bank account, the lender wants to know where it came from. Did you borrow it from someone else? Are you obligated to pay it back? By providing three or more months of statements the lender can determine that the funds you’ve saved came from you and you only. Some home buyers know this and are in fact advised by some loan officers to simply ‘‘put some money in the bank and call me back in three months,’’ assuming that the lender won’t care where the funds came from if in fact they’ve been in an account for that period. Quite true. It’s also quite true that lenders can ask for more than three months. They can mostly ask for whatever they want if they think they’re having the wool pulled over their eyes.

Your funds can come from your job, a bonus, your regular savings, selling something, or borrowing against an asset. Your paycheck can certify that you’re getting a certain amount each month and you can verify that it’s going into a bank account. Same with any bonus or commission income. It’s documented as you make it. Some people have assets they can sell for down payment money. Do you have a car you can sell? Artwork? Stocks? The key to selling an asset is first, you need to document the transaction, and second, the object sold must be an appraisable asset.

An appraisable asset is an item whose value can be determined by a third party expert. That car you want to sell? It’s an appraisable asset. Its value is independently appraised by a variety of automobile pricing schedules or even classified advertising. Do you have an expensive watch or heirloom jewelry? If the item can be appraised, in this instance by a gemologist or jeweler, and sold then you can use those funds to buy the house.

Another form of down payment can come from a ‘‘pledged asset.’’ A pledged asset is typically a stock or investment account that you can borrow against for a down payment. The stocks aren’t cashed in, you simply pledge the asset as collateral for down payment funds. If it can’t be appraised, the lender may not be able to use those funds for a down payment.

If you can’t document where your down payment money is coming from, many loans won’t allow for that. Lenders want to be absolutely certain that the money you used to buy the house is not borrowed from another source. Borrowing from another source will affect your debt ratios and your collateral. It also affects your equity in the property and increases the risk in the loan. That’s why people can’t take out cash from their credit cards for down payments. That money’s borrowed. Lenders want to see you save your down payment.

Wholesale Lenders Can Pay Brokers to Send Them Loans

noreply@blogger.com (^_^) — Sat, 26 Dec 2009 18:29:34 PST

Mortgage brokers don’t lend money; they find money. And they find money from a group of mortgage companies called wholesale lenders. Wholesale lenders don’t make loans to consumers directly. Instead, they make loan programs available to mortgage brokers, who in turn ‘‘mark up’’ the interest rate to the retail level. The difference between the wholesale rate and the marked-up rate is how much money the broker makes. It’s not unlike any other wholesale/retail consumer product: Buy low, sell high.

Brokers can make more money on your loan with something called a yield spread premium, or YSP. Each morning, all wholesale lenders publish their interest rates for that business day. And while most of these rates will be the same, there might be a difference in how much each interest rate ‘‘costs’’ the mortgage broker.

For example, a mortgage broker will begin comparing interest rates from various wholesale lenders. The forte of a mortgage broker is that the broker has the ability to ‘‘shop’’ for the best mortgage rate by comparing the hundreds of lenders that the broker is signed up with.
But what the broker may really be doing is not finding you the best rate but finding himself the most money.

A broker can peruse the daily wholesale rate offerings and find three lenders offering a 15-year fixed-rate mortgage at 5.50 percent. The difference is not the rate; the difference may be the YSP. Lender A might offer a 1.00 percent YSP, Lender B might be offering
a 1.375 percent YSP, while Lender C is offering only 0.875 percent that day, all on the very same 15-year fixed-rate mortgage program. Remember, it’s the YSP that typically goes to the mortgage broker as its profit. So which lender do you think the broker is going to choose? Lender B.

On a $400,000 loan, Lender A pays the broker $4,000, Lender B pays $5,500, while Lender C can muster only $3,500 that day. Lender B gets your loan because the broker makes more money from it while you get the rate you were promised.

Is that mortgage broker going to give you back some of that money? No. Should she? I don’t think so, but others may disagree. If you agreed to a 5.50 percent interest rate and your broker locked you in at that rate, then you got what you wanted. Of course, a mortgage broker who picks up a few extra bucks because she found a slightly better deal at one of her wholesale lenders could certainly offer to give you some of that ‘‘extra’’ money, but she is not obligated to. Compare it to a retail store. If the store can cut its costs on a product, it can pass along the savings to you, but it is not obligated to do that.

How to Establish Credit

noreply@blogger.com (^_^) — Thu, 24 Dec 2009 17:16:48 PST

If you don’t have any credit and you want to establish it, you’ll need to go a step further than using alternative-credit sources such as telephone and cable television bills. To establish credit, you need to buy something on credit, then make your payments on time, every time. That’s it.

But how can a person establish credit if no one will grant credit without a prior credit account? It’s true that there are certain credit accounts that require a traditional credit history, but there are a couple of places to get started with a credit account. The first place to begin is most likely at a department store. Many department stores offer credit accounts and are willing to issue credit to first-timers. Don’t expect a credit line in the stratosphere, though. Your first credit account is likely to have a credit limit of $250 to $500. Another option is to apply for a credit account from a gasoline company. They too may issue credit on a limited basis to those without a history. But if you’re having trouble or would rather not wonder whether or not you’re going to get a credit card, then go to your bank and open up a secured credit card account.

A secured credit card is just like any other credit card in that it has a credit limit and when you charge something on it, you have to make monthly payments to pay it off. However, instead of having an open credit line with no collateral, you ‘‘secure’’ the card with cash up front.
For a secured credit card, you will need to make a cash deposit of anywhere from $250 to $5,000, whatever you choose or the bank requires, into a collateral account. This cash deposit acts as a ‘‘backup’’ for the bank in case of default on your part.

If your deposit is $1,000, then your credit line will be $1,000. You will then be issued your first credit card, and it will look just like any other card. When you buy something on the card, you will get a statement in the mail each month showing the required minimum monthly
payment.

The minimum monthly payment is your contractual obligation to pay the bank back. If you charged $100, then your minimum monthly payment could be, say, $18.00. Your minimum monthly payment is a function of the interest rate attached to your card account.

You can pay the minimum, which includes the interest or finance charge, or you can pay a little more than that or you can pay the balance in full. It’s up to you, but you need to pay at least the minimum required on or before the due date.

Most card accounts give you 25 to 30 days to make a payment by the due date, although some cards ask for the money a lot sooner. Pay very close to that due date and don’t be late; if you are, you will be establishing bad credit.
Ithe late payments show up on your credit report, showing how many payments were more than 30 days past due, 60 days past due, and so on. Those notations are for credit-reporting purposes, and lenders use them as an accepted guideline when determining ‘‘good’’ or ‘‘not so good’’ credit.

Be warned, however: Even if a payment to a credit account is less than 30 days past the due date, if it is as little as one day past the due date, the credit issuer will most likely penalize you by increasing your interest rate to much a higher level. Pay the account before the due date and you won’t have those problems.

Most secured cards will return your cash deposit to you after 12 months of on-time payments and keep your credit line the same as the original amount. Continuous on-time payments and responsible credit usage will soon be rewarded with an increased credit limit (if that’s what you want, of course).

After you’ve opened up your first credit account, you may apply for another credit account after three to six months of use. Be careful though; just because credit is available to you doesn’t mean that using it is a good thing. Many a folk have gotten themselves into credit hot water, or worse, by opening up and using too many credit lines.

When you’ve established a track record with a credit account, you need to make certain that the lending institution is reporting your payment history to the credit bureaus. To find this out, simply ask about it while you’re applying for the credit account. If the institution doesn’t report, you may want to try another bank. Odds are that almost every bank will report your information, however. After all, they’re members, of the credit bureaus, too.

Are There Poor Credit Home Loans Today?

noreply@blogger.com (^_^) — Wed, 23 Dec 2009 18:46:50 PST

If you were wondering if poor credit home loans still exist, then you will want to read this article. Specifically, we will discuss what has happened to bad credit mortgages, where you can go to get a mortgage if your credit is bad, and the best things you can do to improve your chances of qualification. After reading this article, you should have a good understanding of where bad credit loans are today.

A few years ago, if you wanted to buy a home but did not have good credit, you had many options. Mortgage professionals used to joke that if you could fog a mirror you could get a mortgage! There were sub-prime lenders who would lend to people with scores down in the 500'. Lenders offered 100% financing at good rates to people with scores down to 620. There were others who offered no doc and stated income loans. Unfortunately, the implosion of the mortgage market has changed that.

In today's mortgage market, people with scores below 620 have almost no options unless they have a sizable down payment or are looking to refinance and have a great deal of equity in their homes. Those with scores less than 700 but above 620 are looking to the FHA for mortgages. This is the best place to look for poor credit home loans in today's market. The benefits of going with FHA is that they will accept lower scores than other non-insured lenders and they place more of an emphasis on your recent credit file. Once you are approved, your interest rate is not generally impacted by your credit score.

If your score is less than 620, unless you have access to a significant amount of cash, you will need to work on improving your credit score. Fortunately, there are numerous things you can do. You will want to start by getting a copy of your credit bureau. You can get this for free at http://www.annualcreditreport.com. Once you have this report, you will want to go over it carefully and notice any errors or negative credit reporting that you feel is questionable. Pay attention to accounts that are reporting late, negative accounts reporting more than seven years after the date of last activity and your credit card limits. Starting with the two or three items that will have the most impact on your credit score, you will want to dispute these items with the three credit bureaus.

Once you have completed your first round of disputes, you will want to continue the process until you have corrected any errors on your report. While you are doing this, you will want to work on paying off as much revolving debt as you can. Paying each individual credit card to down below 30% of the limit is ideal. If you lack positive good credit, you may get a parent or spouse with good credit to add you as an authorized user to an account with a low balance.

While bad credit home loans are not as prevalent today, for people with scores over 620, they still exist. Those with a score lower than this will want to take steps to improve their credit score. Hopefully, you now have an understanding of where bad credit mortgages are today, and what your options are.

Wendy Black Polisi is the founder of creditrepaircollege.com. To learn more about poor credit home loans and credit restoration please visit her on the web.

Article source:
http://ezinearticles.com/?expert=Wendy_Black_Polisi

Watch out of Loan Fraud

noreply@blogger.com (^_^) — Mon, 21 Dec 2009 03:48:46 PST

Engaging in loan fraud is tempting, especially with loans that require very little or no documentation. However, loan fraud is bad news. It doesn’t just lead to a slap on the wrist; people go to prison for it.

And it’s not small potatoes. With the advent of the Internet, AUSs, identity theft, and each subsequent technological advance in mortgage lending, good old-fashioned crime finds new ways to get to the table. There are plenty of ways to commit loan fraud on an application, and they all involve the same thing—lying. The most common lie may be about income. In cases of mortgage fraud, it’s usually the borrower who makes arrangements with others to help pull the wool over the lender’s eyes.

Let’s say a borrower has paid his rent more than 30 days past his due date nearly every month for a year. Knowing that getting approved with such a lousy rental history will be tough, he makes arrangements with a friend to pose as his landlord. The lender then sends the ‘‘landlord’’ a form asking how much the borrower’s rent is and if the borrower has ever been late with his rent. If he was late, then how late was he?

Or the borrower fakes her income by changing some information on her paycheck stub or makes a fake W2. How does a lender combat such fraud?
Lenders have been around the block a few times. And no, the borrower just mentioned didn’t invent a new way to get around a bad rental history. Several years ago, a lender would accept a rental verification form from an individual just as easily as it would accept a mortgage rating from a credit report. Not anymore. Lenders now want something a little more than someone’s verbal or written verification.
Why? Well, let’s say it’s tempting to fudge a little when your credit history is less than stellar. A lender will now ask for 12 months’ cancelled checks. Not 12 months’ worth of checks made out to the fictitious landlord, but the front and the back of those checks, showing a cancellation date.

What, no cancelled checks? The borrower paid with a money order? Fine; let’s see the copies of the money orders. All 12 of them. I’m sorry, no copies? You sometimes paid with cash? Then we’re sorry, too. No loan approval.

It’s also not too much of a stretch to imagine a real landlord giving out a sterling rental history verification when the renter was anything but sterling. Why would a landlord do such a thing? To get that no-good deadbeat renter out of his rental house, that’s why. No, a lender wants to get just a little more than warm fuzzies when approving a loan.

Did the borrower provide a fake pay stub? Lenders can verify employment and payment history by making a phone call to the employer. There are even businesses that specialize in employment verification that the lender can call. Lenders can also get copies of previously filed tax returns when the borrower gives them IRS form 4506, asked for on almost every loan application.

Lenders get real serious when it comes to fraudulent loans. People go to jail, plain and simple. There are advertisements that promise to erase all your bad credit legally by having you simply ‘‘start all over’’ with a new identity. Sounds easy enough, right? But it’s against the law. It also goes against the mortgage application, which asks, ‘‘Have you ever been known by any other name?’’ If you say no, then you just lied on your application. Loan fraud has actually been made easier by the lenders themselves with the advent of low and no documentation loans, where applicants cross their hearts and hope to die that what they put on the mortgage application is true. Buying a house, moving in, and being paranoid that every time there’s a knock at the door, it’s the FBI isn’t worth it. There are so many loan options available that loan fraud simply isn’t worth it. If the loan is properly structured, almost anyone can get a mortgage.

Government Mortgage Loan Aspects

noreply@blogger.com (^_^) — Sat, 19 Dec 2009 16:48:23 PST

Government loans, while still automated, have their own guidelines, paperwork, and verbiage. That takes some getting used to. Granted, it’s not that big of a deal, but if a mortgage company only does conventional loans then you can bet they won’t handle your deal as efficiently (if at all) as someone who specializes in government loans. FHA grants certain status to mortgage bankers who are allowed to underwrite and approve FHA loans. Such status is called Direct En-
dorsement, or DE. If you determine that you need an FHA loan, the very first thing you need to ask the lender is if they have their DE approval from HUD. If they don’t, go elsewhere. If they have no idea what you’re talking about, go elsewhere. FHA lending is just a tad different from conventional, not a lot, but enough to slow things down when you don’t need them slowed down. FHA loan? Get an FHA lender.

Are you a veteran or otherwise qualify for a VA loan? Just as HUD grants special DE status to certain FHA lenders, the VA grants special status for VA loans in a similar fashion. If a lender is VA approved, then the process is streamlined. The lender approves the loan in-house, the appraisal is ordered in-house (compared to ordering it directly from the VA), and all approvals are done in-house.

For example, having Lender Approved Appraisal Process, or LAAP, allows the lender to do the appraisal without all the paperwork involved when ordering one through the Department of Veterans Affairs. If you want a VA loan, ask your lender if they’re LAAP approved. If not, again move on.

Once you’ve decided which type of loan you’re going to get, stand firm in your decision. Sometimes if a banker or broker can’t offer the loan you’ve decided on they’ll try and talk you into switching to something that they prefer. For example, say you call a lender and ask for a 3-percent-down FHA loan and they try and talk you into a conventional 3-percent-down loan instead. They’ll run the numbers, quote some rates, and try and convince you to go conventional instead of government. If this happens, simply ask them if they’ve got their DE approval from HUD. If not, then I’d be a little suspicious as to why they’re trying to talk you out of a government loan.

If you see that a lender or broker specializes in your type of loan request, then certainly include them on your list of prospective lenders. Lenders who specialize in government loans tend to do a lot of them, which will mean an easier approval process for you. Be careful though. Make certain that the lender who claims to specialize in VA loans also doesn’t claim to specialize in FHA, conventional, jumbo, first-time buyer, construction, bad credit, excellent credit, and so on. That removes some of the credibility in the claim when the lender specializes in every single loan on the planet. Specializes in everything? Please. I’m not saying they’re not any good at a VA loan, but wouldn’t you feel better about a lender who says, ‘‘we specialize in VA loans’’ without claiming that they specialize in everything else? Makes some sense, doesn’t it?

Your Assets for loan

noreply@blogger.com (^_^) — Fri, 18 Dec 2009 18:07:09 PST

Your lender need to know what kind of assets do you have to give you a loan. First and foremost, you need to make sure the assets belong to you and you have access to them. Sometimes first-time home buyers share a savings or money market account with their parents. Even though your name might be on the statement, a lender might split that asset between you and your mom. Let’s say you have a checking account with your mom that you used all through college, and now there’s about $12,000 in the account that you plan to use for a down payment. If your mom’s name is on the account, you may only get credit for $6,000. If this happens to you, have your mom turn over that account to you by writing a short gift letter stating, ‘‘I’m giving all these funds to my wonderful son so he can buy a house.’’ Any asset you list needs to be all yours.

Another consideration may be how ‘‘liquid’’ the asset is. If you have a retirement account worth $50,000 but can’t get to it unless you retire, it’s not liquid. You can’t get to it and therefore can’t count it toward buying your home. Some accounts let you cash them in but do so only under a penalty. If you can get that same $50,000 for the purposes of buying a home but there’s a 10 percent penalty if you do that, then the lender might also deduct that 10 percent, which leaves $45,000. Be careful that you understand the tax and penalty implications of tapping retirement accounts by speaking with a good tax accountant or financial planner.

What should i look for in a mortgage loan?

noreply@blogger.com (^_^) — Thu, 17 Dec 2009 13:59:56 PST

Get a loan that you feel comfortable with, one you don’t have to worry about, and one that is easy to get in terms of qualifying and cost. You can knock yourself out on that one. Fannie and Freddie make up about a quarter of all mortgages generated; the others are government, jumbo, and portfolio loans. But instead of trying to find the absolute best loan for your situation, first ask yourself if indeed you are very different from most other borrowers. Do you have good credit? Do you have a down payment? Do you have a job and can you afford the new mortgage payment? If so, there’s no reason to get cute about your mortgage.

Forget perusing through your mortgage lenders loan book exploring all the possible alternatives.Get a fixed or get an ARM. Fixed if you’re in it for the long term or are risk-averse. Get an ARM if you see this purchase as being short term, say three to five years. Get a hybrid if you’re in between.

Why such narrow choices? Pricing. Look at it this way, if the single most common item on the market today is available with most every lender on the planet, and if the loans are exactly alike, then what do you think that does to the price? It keeps it low. If more people are trying to sell the same product and it’s available twenty-four hours a day then you would think that such a commodity’s determining factor would be price, right? If a conventional loan is everywhere then the only thing you accomplish by trying to find something better is a wasted effort.

Online companies on bid loan

noreply@blogger.com (^_^) — Wed, 16 Dec 2009 17:57:57 PST

What a change from just a few years ago. Today you can fill out a single application online and have several lenders or mortgage brokers provide you with their best quote after reviewing your application. You may not get anything better than what you can get locally, but you still get four mortgage quotes without having to complete four different applications.

Before the advent of various ‘‘mortgage bidders’’ it was unheard of for a consumer to have multiple mortgage applications out at once. Not that it was illegal or anything, it was just if one lender found out that you applied somewhere else then the lender wouldn’t approve your loan unless you cancelled the other ones. Not so today. Now some Web sites actually encourage you to apply, not using several mortgage applications, but with just one application. After you complete the application, it is sent to a select group of lenders or brokers for their review. They’ll see how much money you make, what your current debt load is, and they’ll get your credit report along with your credit scores. After an evaluation, those lenders will make an
offering, which you can accept or reject. This is a relatively easy process for making multiple applications.

Sometimes however you don’t know who’s going to be bidding on your loan or who all will see it. You might see a list of approved lenders but you might come back with a quote from someone you’ve never heard of or who doesn’t have an office in your city. Some of these sites do less ‘‘bidding’’ and instead rely on selling your lead to other lenders or brokers who pay money to see your application. Such companies are nothing more than lead generators who get paid by mortgage companies. No harm there, but be prepared for an onslaught of e-mails and telephone calls advertising their super low, low rates.

The mortgage process has been made both easier and harder at the same time. As the loan approval process becomes more efficient, lenders and loan officers can find themselves in a more difficult situation when it comes to marketing. After all, a loan is a loan is a loan. Lenders have turned a mortgage into an off-the-shelf commodity, making it harder for them to differentiate themselves from other lenders. Most cases, anyway.

Minimum credit score to qualify for a mortgage loan

noreply@blogger.com (^_^) — Sun, 14 Feb 2010 05:08:34 PST

Minimum credit score to qualify mortgage loan depends upon the loan program, but credit scores don’t ‘‘approve’’ or ‘‘decline’’ anyone. Lenders may have minimum credit score requirements for particular loan programs, but you’re not automatically turned down solely because of your score. Don’t forget, just having a low credit score doesn’t mean you can’t get approved. I have spoken with countless customers who either didn’t buy a home or put it off for a long time because when they got their credit score they took it upon themselves to ‘‘decline’’ themselves and didn’t even apply for a loan. This is similar to people who don’t apply for a mortgage they want because they think their debt ratios are too high.

A recent customer called me wanting to apply for a mortgage but he knew his credit wasn’t all that great. High debt load, a couple of late payments, and not much available credit. He was right; his score was low at 581. Unfortunately for many people, once they see a score they consider ‘‘low’’ they give up without ever trying. The guy with the 581 credit score? He got approved for the best rates available for a $185,000 loan. He had some other factors that offset the low credit score, mostly a hefty down payment, but the point is that he got approved.

If There’s a Mistake on Your Credit Report, It’s Your Lender Who Can Best Help You Fix It, Not the Bureau

noreply@blogger.com (^_^) — Sun, 14 Feb 2010 05:04:45 PST

You didn’t know that, did you? You didn’t think your lender would help you fix your credit ? Well, it’s not exactly the lender; it’s your loan officer who is your best friend when it comes to fixing errors.

Remember that your loan officer doesn’t get paid unless your loan closes. If there’s a mistake on your credit report that’s lowering your credit score or otherwise blocking your AUS approval, your loan officer has some contacts that you don’t have.

Credit-reporting agencies solicit lenders’ business every single day. They hire sales reps, just like many other businesses, to make sales calls. No matter what lender or mortgage broker you end up using, there’s a credit-reporting agency representative who is paid to get business from that lender or broker.

These agencies are not direct employees of the three major credit bureaus; they are employees of companies that pull data from these bureaus and report and provide those data to lenders who want to issue credit decisions for their consumers as part of their business or trade. These sales reps promise things such as lower prices for reports, timely reporting, and finally assistance when there are problems. Fixing mistakes on credit reports is where these companies earn their keep—and it’s your loan officer who knows them.

Forget about credit explanation letters—your loan officer can fix this for you. If it’s a mistake. What’s a mistake in the world of credit reporting? A mistake is something that can be proven wrong by third-party sources. Did the creditor say you were late on one of your payments to it? You can’t simply tell your loan officer, ‘‘No, that’s not correct’’; instead, you will have to provide your loan officer with third-party documentation verifying that what you say is correct.

Find that cancelled check and get a copy of that old statement, give it to your loan officer, and have her take a look at it. If in fact you can show that what was due was paid on time, through a date cancellation on the back of your check, or show how the account was paid online, then all your loan officer has to do is show that documentation to the credit agency
sales rep and he will wipe it clean—something that can take months when consumers try to do it by themselves. Credit agency sales reps get paid to do things like this, and your loan officer has a vested interest in getting mistakes fixed and fixed fast.

Writing an Explanation Letter to the Credit Bureau Does Absolutely No Good

noreply@blogger.com (^_^) — Sun, 14 Feb 2010 05:05:33 PST

A consumer has the right to include an explanation letter in a credit report. For instance, if there’s a late payment on a credit account and you find out about it when you review your credit report, you need to find out if the late payment was, in fact, late.

You find the old statement from the creditor, find the copy of the cancelled check or online , make copies, and send them to the credit bureau. If the negative information is a mistake, the information should be removed completely from the report.

But if it’s not a mistake, you have the right to prepare a letter that must be included with your credit file. Let’s say that, yes, you were late, but there were extenuating circum- stances. You make the payment on time, but for some reason the payment never arrived at the creditor’s payment center.

Soon, you received a late payment warning in the mail from the creditor, so you called the and said, ‘‘I mailed that payment two weeks ago,’’ or whatever. The creditor then said, ‘‘Yes, received it; don’t worry.’’

But the check still didn’t clear. At least, it didn’t clear for a couple of months, but finally it did. So you called the creditor, and the person on the phone told you that the creditor had received it, but it was never reflected that way. When you review your credit report and see the error, you try to correct it by calling the creditor.

The creditor replies, ‘‘We don’t show any record of its being made on time; in fact, we show that it was two months late.’’ You’re astonished. You say, ‘‘But when I called you, you said that you had the payment and not to worry! Now it’s showing up late on my credit report!’’
‘‘I’m sorry,’’ replies the creditor. ‘‘I don’t know who you talked to back then . . .’’
‘‘Fred!’’ you say.
‘‘I’m sorry, but Fred doesn’t work here anymore. There’s nothing I can do,’’ the creditor finally says.
You’re heartbroken. But wait! You have the right to include a letter with your credit file explaining your side of the story, don’t you? Of course you do. So you compose a great letter, with as many facts as you can remember, and send it to the credit bureau.

Guess what? Nobody cares. Several years ago, lenders read credit explanation letters when they were included in the file: ‘‘I bought this piece of junk from them and it never worked, so I didn’t pay them!’’ or ‘‘I was out of the country for three months,’’ or ‘‘I moved and they never sent the bill to my new address.’’

Whatever the case, letters were read by underwriters who were deciding whether or not to approve a particular mortgage. But not now. With the advent of credit scoring, credit explanation letters have gone the way of the dinosaur. If a friend or acquaintance or real estate agent suggests writing a letter to the bureau explaining your side of the story, you’re wasting your time with regard to a mortgage.

You May Have Mistakes on Your Credit Report That You Don’t Know About

noreply@blogger.com (^_^) — Sun, 13 Dec 2009 15:26:48 PST

You have to ask. The three credit bureaus simply collect data and report them back when asked. You can have mistakes on a credit report and not know about it, and this can damage your credit file.

There is no requirement that credit bureaus tell you about errors. In fact, credit bureaus don’t know whether something in your credit report is a mistake or not; they just spit out what’s been given to them. If you paid a credit card $100 and the credit bureau states that you paid only $10, it’s not the credit bureau’s fault. It’s usually the credit card company that transposed a decimal somewhere.

But you’ll never know about these mistakes unless you ask the credit bureaus directly. You do this by getting copies of your credit report from all three bureaus and reviewing them for mistakes. When you find a mistake, you contact the credit bureau and inform it of the error.
When you’ve established that there is an error, the bureau is then required to contact the other two bureaus and have them clean up the mistake as well. But it’s your job to look for mistakes, not the bureaus’.

Recent changes in credit-reporting laws now make it easier for you to get your credit reports. All you have to do is visit www.annualcreditreport com, where you can get your report from three bureaus at no cost to you.
If you do find errors, and you can document the mistakes, once you provide that documentation to one bureau, it’s not necessary for you to contact the other two as well to make sure they get the corrected information. The law requires one bureau to notify the other bureaus when a mistake is found and corrected.

The Most Important Element in Your Loan Approval Is Your Credit Report

noreply@blogger.com (^_^) — Sun, 13 Dec 2009 15:25:29 PST

Everything revolves around credit—the type of loan you receive, perhaps the rate you’re quoted, and even whether you get the approval you want or not. It all boils down to credit.

Your credit is defined as both your ability and your willingness to pay back your creditors. Ability means that you can afford to pay back your creditors, and willingness means that you have the inclination to do so. Both components need to be present to establish a good positive credit history.

How do you get a history? Businesses that you borrow from send your payment patterns to a great big centralized database. Actually, there are three great big centralized databases; they’re called Equifax, Trans- Union and Experian.

Businesses that extend credit to consumers pay money to access these databases as well as putting consumer payment information into them. If you pay Widget Factory on time every month, then Widget Factory sends those payment patterns to the various databases.

If you apply to another company for credit, that company will tap one of those databases with your name, your social security number, and other personal data about you and review how you’ve paid other businesses. If the company’s credit extension guidelines match what you want from it, then, voila` , you’ve got a new credit account.

Portfolio lending

noreply@blogger.com (^_^) — Sun, 13 Dec 2009 15:23:16 PST

A ‘‘portfolio’’ loan means that it is made by a lender with no intentions of selling the loan or having it underwritten to any external guidelines. Instead, the loan is made and kept in the lender’s portfolio of loans. A portfolio loan is a loan made by a direct lender, most usually a bank, that is designed to be kept in-house. Unfortunately, portfolio lending is a term that’s bandied about too often, encompassing loan programs that are nothing near portfolio. Often a portfolio loan is incorrectly described as any loan that’s not a conventional or government loan.

Portfolio loans go by their own guidelines and don’t necessarily follow loan rules established by others. Why would someone want a portfolio loan? Perhaps when their loan application doesn’t quite meet the guidelines of a conventional loan. Or when no government program will work.

For instance, let’s say you just found an apartment building with ten units and need financing. Conventional or government loans don’t cover apartment buildings, so those loans won’t work. Instead, you’ll need a portfolio loan. Or maybe you found a four-plex but had zero money for down payment. If you found conventional financing at all it might require a higher down payment or other special circumstances that youmight not find attractive. Are you a real estate investor and have so many residential properties that conventional lenders think you have one too many? Go portfolio. Where do you get portfolio loans? From your bank. Portfolio lending is more of a ‘‘common sense’’ loan that might not fit the conventional guideline, but shucks, it looks like such a great deal.

Don’t be surprised if your portfolio loan is of a shorter term or maybe a hybrid. Retail banks certainly like to make loans but they also don’t like to tie themselves into any one rate for an extended period of time. If a bank makes a portfolio loan at 6.00 percent, and then three years later rates are at 9.00 percent, they’d like to make more loans, just at the new, higher rates.

Ex-Wife screwed up your credit?

noreply@blogger.com (^_^) — Sun, 14 Feb 2010 05:06:04 PST

It is such a nice problem with you. But i tell you something, keep your divorce decree handy showing who the judge said was responsible for paying what. Getting divorced is a bad thing. What many people don’t realize is that the ex-spouse can mess up your credit report long after the ink is dry on your final divorce decree. I know, I know. The judge said he could have the house and the car and you could have all the credit cards, but if you applied jointly for the house and the car, the lender may, quite frankly, care less about your failed marriage. Lenders agreed to make a loan to both of you, whether or not your relationship worked out. If you split up, that doesn’t dissolve either person’s obligations to pay.

The judge may have the ability to assign credit obligations to either party in such a case, but the judge doesn’t have the authority to absolve either of you from paying someone back. Only the lender can do that. Let’s say you had bought a house together and the exspouse got the house while you signed a piece of paper agreeing to release all interest in the property. Fine. But there’s still a mortgage outstanding. Here’s where you need to be careful. If your ex-spouse is responsible for the mortgage and the car, unless you get off of the original loan you may still find late payments on your credit report. Let’s say you give away the home and sign a warranty deed to your ex-spouse. Unless the ex refinances the loan, the payment history might still appear on your credit report. That’s just the way it works. To compound the problem, if you needed both incomes to qualify for the original loan then the exmay not be able to qualify for a refinance in the first place. In this instance, not only do you need to release all interest in your old home to your ex, you must also have the original loan refinanced to get you off of the mortgage completely.

The same is true for the car and any other loans you might have obtained together. A divorce decree isn’t sent to the credit agency when you get divorced. If you’ve been divorced, you need to get your ducks in a row and review your credit report long before you apply for a mortgage.
Some loans make allowances for legal assignments for who’s responsible for what, and although those obligations may not be taken off of your credit report, any loans still in your name might not be considered. Keep your divorce decree. If you can’t find it, get a copy of it. While a divorce decree won’t erase joint obligations, for qualification purposes old credit items might be excluded from your application when it comes time to determine debt ratios.

How much i can borrow?

noreply@blogger.com (^_^) — Sun, 13 Dec 2009 02:31:54 PST

That depends on a variety of factors, but the most common answer is that your debt ratios are in line with lending guidelines. But it may also be more than that. It may just be the amount that you feel comfortable with. Often when I’ve prequalified clients, typically first-time home buyers, they’re surprised at how much money a lender will lend to them. ‘‘Oh gosh, no. I don’t want that much money!’’ Still others are disappointed that they can’t borrow more than the lender feels comfortable with, using the very same loan parameters.

What’s good for one borrower may not be good for another. Different mortgage programs can have different lending guidelines, but for the most part these programs decide how much you can borrow based upon these ratios. It used to be that debt ratios were relatively strict. If a ratio were above 41, for example, the buyer would either have to borrow less or find a cheaper house.

What is the preapproval process?

noreply@blogger.com (^_^) — Sun, 13 Dec 2009 02:29:48 PST

The ‘‘pre’’ stuff verifies two critical elements in credit approval, which are the ability and the willingness to repay a mortgage. Ability and willingness both go hand in hand. While you can make enough money to be able to afford to pay back a loan, if you don’t have the willingness to do so then it won’t work. And of course there are certainly a lot of people out there that may have the willingness to pay someone back, they just don’t have enough money to do so.

By verifying the income, verifying the available assets to close on a house, and reviewing the credit report, these two initial hurdles are overcome. It’s no big deal, but documenting your prequalification really is your very first step. But let’s examine the process a little more in detail.

First, here’s what doesn’t happen. Loan applications aren’t sent to some loan committee for review. Loan committees went out with leisure suits. In those days, yes, that’s how it happened. Potential borrowers would apply for a mortgage and extol their financial virtues; a loan committee, usually meeting once per week, would later discuss the positives and negatives of the applications. A host of old men in black suits, smoking cigars and saying things like ‘‘harrumph,’’ would eventually approve or disapprove the loan request.

Today, your loan application is approved or not approved at the very beginning of the process before it ever gets to an underwriter (the person who physically approves your loan). This process is now mostly automated, which is different, but it’s also different because everything is approved first before anything is ever verified. It’s different from the old days. It used to be document and verify absolutely everything before any approval whatsoever. You could go three to four weeks without really knowing if you’re approved. Today, your loan is approved first, then verified later.

Those of you who have applied for a home loan within the past ten years or so will recognize this next drill.

First, you gathered all your documentation—bank statements, tax returns, and paycheck stubs—whatever you could think of. Then you trotted down to your local mortgage company, bank, or savings and loan and met with a loan officer. You completed the loan application with a loan officer who then detailed the types of documentation needed. Your credit report was also pulled and reviewed. Your debt ratios were calculated to make certain you weren’t borrowing more than you, in the lender’s eyes, could handle.

If there were any credit problems, say a late payment on a car last year, the loan officer would ask for an ‘‘explanation letter.’’ The credit report would show the problem, whether a pattern or an isolated instance. The explanation letter was a secondary requirement that had to be in the file. Many times the letter simply said, ‘‘I forget why it was late.’’ And it would still be okay. It didn’t have to convince anyone or be necessarily plausible, it just had to be there. You’d also have to address any other discrepancies, such as length of time at current job or a gap of employment. Didn’t work because you broke your leg? Provide some medical bills to prove it. Sudden deposits of money in the account? Prove where you got it to make sure you didn’t borrow the money from somewhere else, affecting your debt ratios or perhaps hiding a prior lien on the property.

And that’s just from your standpoint. At the same time an appraisal of the home you’re considering buying would be ordered along with some initial title work. Then a bevy of folks would start mailing stuff to you, explaining this and declaring that, and using words you’ve never heard of. Then about three weeks later, after all of the required documentation has been gathered, and only then, your complete application would be sent to a loan underwriter for approval. It’s been nearly a month and the mortgage company still hasn’t looked at your complete application.

This process simply means this: Verify first, approve last.

After make an offer to a house

noreply@blogger.com (^_^) — Sun, 13 Dec 2009 02:19:16 PST

Right after your contract is accepted, you will order an inspection of the property. An inspector crawls throughout your house looking for problems in the house. Is there termite damage? Is the roof in good shape? Do the faucets leak? Inspectors will even run the dishwasher to make sure it works okay.

Upon a satisfactory inspection report, your lender will order an appraisal. Notice that the appraisal and inspection are two entirely different things, although some get them confused. An inspection looks for problems with the house. The appraiser on the other hand ‘‘appraises’’ or determines the value of the home. Comparing similar homes in your area that have sold recently, typically within the previous twelve months, does this. While appraisers may indeed note the condition of the house as Good or Average, they don’t inspect the house for defects like an inspector does.

At the same time, your title is researched and a report is prepared. Your title report reflects all previous owners of the property as well as anyone else who might have had an interest in the home such as a lender issuing a mortgage or a contractor who placed a lien on the home during a remodeling stage. The purpose of this research is to make sure there are no other previous owners who at some point might lay claim to your property after you close on your house. For example, some long lost heir to the house fifty years ago never signed anything authorizing transfer of the house. Or there is an unsatisfied judgment on record that has never been paid. All previous liens or claims against the property have to be accounted for and properly released. When this is done, the title company will issue a title insurance policy protecting the lender and others against any
previous claims, recorded or unrecorded.

Once your appraisal and title work are done, your loan then gets sent to the underwriter, who reviews all the documentation and authorizes your loan papers to be printed. Your papers are sent to the person assigned to hold your closing, you show up, sign, and close your deal.

The benefits of getting preapproved

noreply@blogger.com (^_^) — Sun, 13 Dec 2009 02:16:37 PST

You know before you go. Before you ever start shopping for a home you should first have your preapproval letter in your hand. Preapprovals speed up the entire home buying process. You can shop with confidence, knowing that there are no ‘‘kinks’’ in your application, while your agent can look for homes on your behalf knowing that you’ve already arranged for financing. Even the seller of a home benefits, knowing that they’re selling to someone who has already applied for, and been approved for, a mortgage. Still, some consumers don’t get this step done until after they’ve found a home. That’s a mistake for the obvious reasons but also a mistake for one not so
obvious.

Let’s say there’s a home on the market for $200,000 and there are two exact offers that arrived simultaneously. One buyer hasn’t seen a lender while the other one has. One borrower hasn’t reviewed their credit report while the other one has a preapproval letter in hand. Who do you think will get the house? Still another buyer makes an offer below the asking price but also provides a preapproval letter stating that the loan is ready to close. Do you think a preapproval letter can sweeten an offer? Of course it can. The seller knows there won’t be any hitches and knows that he or she can move into a new home quickly.