Tag Archive for 'bad credit home loan'

The housing market over the last two years has received a major beat-down. Put it this way; if the housing market were a sports franchise, it would be the Detroit Lions--zero wins, sixteen losses last year. One fan even tried to claim the team as a "total loss" on his tax return. But 2009 has shown some improvement--both the Lions and the housing market are picking themselves up and moving on.

Today, foreclosures are sky-high, home prices are at rock bottom, and mortgage interest rates are as low as we've ever seen them. It's a bonanza for buyers.

But the housing market has been subtly changing, and if you've been sitting on the fence instead of buying, chances are that's where you'll stay--on the fence, while everyone else is sitting in a nice house. All this government stimulus is changing the tide of the economy, and the signs are there.

Look at these housing facts:

1. The number of existing home sales is up significantly in many markets.
2. The supply of new homes for sale is down by 40%.
3. Pending home sales are as high as they've been since 2006.
4. Home prices are increasing in most US markets.

The days of holding sellers' feet to the fire are nearly over. If you bought your home in February 2009, congratulate yourself--you found the official bottom of the market. Both home prices and mortgage rates were in the basement that month. Since then, things have gradually moved to the sellers' advantage, and they are feeling their power.

The problem with trying to find the bottom of the market is that you don't really know it's there until it has passed. But it hasn't been that long--today, mortgage rates remain low and home prices have a lot farther to climb. Home buying conditions may not be as perfect as they were back in February, but they're still excellent, and a lot better than you'll find next year. Keep in mind too that mortgage rates are on the increase, and most experts expect that they will hit 6% sometime next year.

What about people with bad credit? You need to start with a conversation with an experienced loan officer, find out what you can qualify to buy now, and what you can do to improve your position later. Even bad credit mortgage rates are comparatively low, and it might be better to buy a cheap house now at a higher interest rate, and then refinance into a lower rate later when you have improved your credit. Enlist the help of a good credit counselor and a loan agent and get started before the housing bust passes you by.

If you have bad credit, just hope you don't live in California, Florida, Arizona, Michigan, or Nevada. Major lenders are piling on the poor people who own homes in these states, requiring higher credit scores and charging more to lend in these designated "distressed" areas. On Monday, one of the largest American banks is joining in the beatdown of distressed states.

What makes an area distressed in the first place? A housing market with falling values, that's what. And by making it harder to finance in these states, aren't lenders making things even worse? How can distressed real estate markets make a comeback if buyers have a hard time getting loans there? Wasn't this what TARP funds were for--lending?

Once again, lenders are at cross purposes with the public interest--and as long as there is no stick to go with the nice carrots the taxpayers keep feeding them, nothing will change. What can you do? If you have a bad credit history, or even just an okay credit history, you are really going to have to shop around for your next mortgage. Make sure that the lender you choose works in your state and doesn't impose extra fees because of where your property is. Shopping online is probably your easiest route to multiple offers and quick comparisons. Good luck!

On October 1st, new rules for sub-prime mortgages and bad credit home loans finally took effect--only about fifteen years overdue, but better late than never, right? Now, lenders making loans designated "high-priced," which covers most mortgages to people with bad credit, must:

1. Determine your ability to repay the loan and must verify your income.
2. Not saddle you with a prepayment penalty if the monthly payment can change during the first four years of the loan.
3. Impound your home insurance and taxes in your monthly mortgage payment and keep these items paid.

The downside? You have to prove that you earn sufficient income to repay your mortgage. The upside? Added oversight should give investors more confidence when buying subprime mortgages, increasing the availability of these loans for those who need them.

Who is the perfect candidate for a subprime loan today? Someone with plenty of income that can be verified, a sizable down payment, and lousy credit that can't be quickly cleaned up can benefit from today's subprime loans. With the real estate bargains available, it may be worth buying even if you have to take on a bad credit mortgage for a couple of years. Once your bad credit has been cleaned up, refinance to an FHA or conventional loan and get the benefit of a low rate in addition to a cheap price on your home.

Homeowners who experience financial hiccups can find themselves in a bind. Once the emergency's over -- you have a new job, your deadbeat cousin paid you back, business picked up -- you'd like to go back to being a good financial citizen and pay your bills. Unfortunately it's not just a matter of resuming your mortgage payments -- you now have a backlog of unpaid principal, interest, fees, and maybe even attorneys' charges and there is no way you can make good on it.

If you communicate with your lender and can show that you are able to pay your mortgage, you may be offered a chance to keep your home -- in mortgage lending this is called a retention option. One kind of retention option is called a claim advance. Homeowners who have an FHA loan (which required that you pay for special insurance when you got the mortgage) or any other loan that requires them to pay mortgage insurance premiums may be able to use that insurance to get themselves out of a jam.

The deal is this: If your mortgage was to go into foreclosure, your lender would probably file a claim and the mortgage insurer would have to pay it. So it may be in everyone's best interest if that doesn't happen. If you qualify, the insurer may lend you the money to bring your mortgage current, interest-free, and at terms you can repay. So if there is any doubt about your ability to make your next mortgage payment, call your lender's workout or resolution department right away -- make it easy for them to make it easy on you.

According to the New York Times, a recent study found that minority borrowers and those with less education paid higher fees for their loans. The 270 page report, which was compiled for the US Department of Housing and Urban Development (HUD), studied nearly 8,000 mortgage loans and concluded that college-educated borrowers paid over $1,000 less than those without a college education.

The study's author, former HUD economist Sarah E. Woodward, guessed that lenders quoted lower fees to better-educated borrowers because they believed that these prospective borrowers were more likely to shop around or had a better idea of what fees they should be paying for the kind of loan they were getting.

So how does this information benefit you? That's easy. By shopping online you maintain some privacy -- your quote can't be swayed by any impression of your education, race, gender, or other factors. And the fact that you are online in the first place means it's likely that you have a certain level of savvy and that you are clearly shopping; both are factors which should motivate your lenders to give you a fair and competitive quote.

A major contributor to the crisis in subprime lending was the loss of home values in many markets. As home values soared, borrowers with bad credit became afraid of being priced out of the market before they could get their credit cleaned up. So they took out subprime mortgages that gave them a 2 or ...

One thing you read about in connection with subprime and other loans is to beware of prepayment penalties. Maybe it's the word 'penalty' that makes this feature seem sinister. However, lenders don't expect something for nothing -- by agreeing to refrain from retiring your mortgage for a certain number of years you make lending to ...