Comments on: Time Is Money and Information Is Power– Use Yours Wisely http://www.mortgagecreditproblems.com/blog/time-is-money-and-information-is-power-use-yours-wisely/ Expert Advice & News on Bad Credit Mortgage, Mortgage Refinancing & Home Loans Sat, 31 Jul 2010 00:56:45 +0000 http://wordpress.org/?v=2.3.2 By: Gina Pogol http://www.mortgagecreditproblems.com/blog/time-is-money-and-information-is-power-use-yours-wisely/#comment-16 Gina Pogol Tue, 27 May 2008 16:59:21 +0000 http://www.mortgagecreditproblems.com/blog/time-is-money-and-information-is-power-use-yours-wisely/#comment-16 It depends on what you call 'bad credit.' Many bond program underwriting guidelines are similar to those of FHA. Until recently, FHA didn't even have a minimum credit score requirement. Now it's 580 which is pretty low by most standards. FHA also uses a matrix to judge the overall strength of an application. Deal killers include foreclosures within the last three years, bankruptcies within 2 years, or multiple late payments on mortgages in the last year. Normally an application is underwritten by an automated system but if it gets kicked out ("referred")a human underwriter will look at it and weigh all the factors involved. The best thing you can do to help your case is to make your payments on time now, and clear any collections, judgments, etc. Underwriters look far more favorably on applicants who can show that while they had some issues in the past they have cleaned up their acts. A continued pattern of delinquency won't help you get approved. Second, these loans require verification of income, and your income needs to be sufficient to make your payments and your mortgage. In general, your new house payment shouldn't exceed your current housing expense by much unless you have also managed to save a lot of money. Otherwise, an underwriter will think that if you could barely pay your bills when you had a low rent payment how could you possibly make a higher mortgage payment with the same income? So if your credit is marginal, your income and assets become a lot more important. It depends on what you call ‘bad credit.’ Many bond program underwriting guidelines are similar to those of FHA. Until recently, FHA didn’t even have a minimum credit score requirement. Now it’s 580 which is pretty low by most standards. FHA also uses a matrix to judge the overall strength of an application. Deal killers include foreclosures within the last three years, bankruptcies within 2 years, or multiple late payments on mortgages in the last year. Normally an application is underwritten by an automated system but if it gets kicked out (”referred”)a human underwriter will look at it and weigh all the factors involved.

The best thing you can do to help your case is to make your payments on time now, and clear any collections, judgments, etc. Underwriters look far more favorably on applicants who can show that while they had some issues in the past they have cleaned up their acts. A continued pattern of delinquency won’t help you get approved.

Second, these loans require verification of income, and your income needs to be sufficient to make your payments and your mortgage. In general, your new house payment shouldn’t exceed your current housing expense by much unless you have also managed to save a lot of money. Otherwise, an underwriter will think that if you could barely pay your bills when you had a low rent payment how could you possibly make a higher mortgage payment with the same income? So if your credit is marginal, your income and assets become a lot more important.

]]> By: Gary http://www.mortgagecreditproblems.com/blog/time-is-money-and-information-is-power-use-yours-wisely/#comment-15 Gary Sat, 24 May 2008 00:24:08 +0000 http://www.mortgagecreditproblems.com/blog/time-is-money-and-information-is-power-use-yours-wisely/#comment-15 I've heard a lot about these bond programs that help new buyers with their down payments. Can someone with bad credit qualify for this type of a program? I’ve heard a lot about these bond programs that help new buyers with their down payments. Can someone with bad credit qualify for this type of a program?

]]> By: Gina Pogol http://www.mortgagecreditproblems.com/blog/time-is-money-and-information-is-power-use-yours-wisely/#comment-13 Gina Pogol Fri, 23 May 2008 23:06:17 +0000 http://www.mortgagecreditproblems.com/blog/time-is-money-and-information-is-power-use-yours-wisely/#comment-13 True. I also find this happens a lot when students living at home buy a car with a really high payment. They graduate, get a job, and want to buy a house -- but that $850 a month truck payment is a booger. Consolidating student loans is one possible option, but keep in mind that loans that lower your payment by stretching out the repayment period will result in you paying more interest over the life of the loan. I recommend that you continue to live like a poor student a little longer and get yourself in a stronger financial position before taking on home ownership. Look at what you'd be paying if you bought a home in your neighborhood, take the difference between that and your current rent, and save that each month. It will get you used to paying the extra (and seeing if that's something you want to do every month) while helping you save a bigger down payment or pay down bills. Starting out smart can help you avoid a lifetime of bad credit mortgages or subprime financing. True. I also find this happens a lot when students living at home buy a car with a really high payment. They graduate, get a job, and want to buy a house — but that $850 a month truck payment is a booger. Consolidating student loans is one possible option, but keep in mind that loans that lower your payment by stretching out the repayment period will result in you paying more interest over the life of the loan. I recommend that you continue to live like a poor student a little longer and get yourself in a stronger financial position before taking on home ownership. Look at what you’d be paying if you bought a home in your neighborhood, take the difference between that and your current rent, and save that each month. It will get you used to paying the extra (and seeing if that’s something you want to do every month) while helping you save a bigger down payment or pay down bills. Starting out smart can help you avoid a lifetime of bad credit mortgages or subprime financing.

]]> By: Tod R. http://www.mortgagecreditproblems.com/blog/time-is-money-and-information-is-power-use-yours-wisely/#comment-12 Tod R. Fri, 23 May 2008 22:53:25 +0000 http://www.mortgagecreditproblems.com/blog/time-is-money-and-information-is-power-use-yours-wisely/#comment-12 I was recently told the same thing. I think it is because I have so many student loans to pay off. I would imagine this doesn't look good when applying for a home loan as it could be evidence that you may not be able to afford a house payment. Am I right? I was recently told the same thing. I think it is because I have so many student loans to pay off. I would imagine this doesn’t look good when applying for a home loan as it could be evidence that you may not be able to afford a house payment. Am I right?

]]> By: Gina Pogol http://www.mortgagecreditproblems.com/blog/time-is-money-and-information-is-power-use-yours-wisely/#comment-11 Gina Pogol Fri, 23 May 2008 22:52:50 +0000 http://www.mortgagecreditproblems.com/blog/time-is-money-and-information-is-power-use-yours-wisely/#comment-11 If your debt to income ratio (debts including mortgage, property taxes, homeowners' insurance, and your other monthly obligations divided by gross income) is too high to get a credit card it's probably too high to get a house. Unless your rent is very expensive and buying a home would lower your housing expense. For a good credit, grade-A mortgage you should ideally have a debt to income ratio of no more than 33% although a substantial down payment and excellent credit could secure you an approval with a ratio as high as 45%. If your debt to income ratio (debts including mortgage, property taxes, homeowners’ insurance, and your other monthly obligations divided by gross income) is too high to get a credit card it’s probably too high to get a house. Unless your rent is very expensive and buying a home would lower your housing expense. For a good credit, grade-A mortgage you should ideally have a debt to income ratio of no more than 33% although a substantial down payment and excellent credit could secure you an approval with a ratio as high as 45%.

]]>