Buying A Home With A Less Than Stellar Credit Rating

Are you starting to consider buying a home?  If so you have probably heard how important your credit score is in obtaining a mortgage.  It is possible that you may have been previously turned down for a home loan because of your poor credit.  Or that you have pulled your credit report to realize that your credit rating is far worse then you thought it was.  Whatever the case may don’t give up on buying a home just yet.  Even with a credit score that is too low for a conventional thirty year mortgage there are numerous options you can look into for financing a home.  You might be surprised by what a mortgage broker can do to help your situation.

First off be aware what lenders are looking for when lending money to individuals for a conventional mortgage.  A general rule of thumb is that a borrower should consider saving at least twenty percent of homes price for a down payment and a FICO score of about six hundred fifty to receive a conventional mortgage with a low interest rate.

There are a host of things that lenders look at when deciding whether or not a borrower is a worthy risk.  One of the major factors, as previously discussed is a person’s credit score.  Another element that borrowers use is the amount that borrowers have for a down payment.  It is possible to offset a lower credit score with a higher down payment.  Lenders are apt to believe that you are less of a risk the more equity that is invested into the home.  Your personal interest in the home is greater and therefore lenders believe you are a better risk.

If you have a less than perfect credit score and a small down payment don’t count yourself out of the mortgage game yet.  Talk with a mortgage broker about various non-conventional loan options.  Some options include: FHA loans, VA loans or U.S. Department of Agriculture loans are all options with less stringent guidelines then conventional mortgages.

If none of these options pan out consider working on getting your credit score up, saving money and working towards financing a mortgage in two to three years when your financial situation has recovered.  There are many ways to work towards a better credit score including:

• Take care of correcting errors in your existing credit report especially with collection agencies and late payments.
• Make payments on time all the time.
• Pay down the balances on revolving credit cards to decrease your debt to income ratio.
• Give yourself some time to build your savings.

Work with a mortgage broker to discuss options that are available today.

Cross Country Mortgage in Brighton, Michigan provide mortgage services for clients including new home loans, refinancing, reversed mortgages, new purchase home mortgages and home equity loans to the entire Livingston County area including Brighton, Howell and Livingston County. Cross Country Mortgage Brighton, MI at http://brightoncrosscountry.com/.

The Difference Between Mortgage Brokers and Banks

Are you looking into financing the purchase of a new home?  You may be overwhelmed at the possibilities that exist within the mortgage industry.  There are numerous options and channels that can be used to obtain a mortgage.  In this article we will focus on two specific areas, mortgage brokers versus banks.

Mortgage brokers work as a middle man between lenders and borrowers.  The broker works to secure several best case scenario’s for borrowers to choose from a variety of lenders.    A borrower is allowed to compare and contrast the options that are available, using the knowledge and assistance of a mortgage broker.  Mortgage brokers account for more than ten percent of the mortgage financing on all home loan originations.     When the real estate market was in full bloom mortgage brokers peaked, accounting for thirty percent of loan beginnings.

Borrowers working with a bank are in more of a retail situation.  A bank or financial lending institution states what their best available offer is, given the borrowers situation and they can either choose to accept the offer or continuing searching competitors for a better offer.

As with all financial transactions there are positives and negatives of both channels of obtaining financing for your mortgage.  Some situations leave you with no alternative but to choose one over the other.  If you are a borrower working with a poor credit or a loan situation that is a bit trickier than what is normal a mortgage broker may be your only option to finding a loan that works for you.

Most homeowners find themselves turning to their bank or financial institution when they find they are in need of a mortgage or begin looking into refinancing options.  However, when they have trouble qualifying for a loan through their own bank many turn to mortgage brokers.  Don’t assume that rates and loan options won’t be as competitive when using a mortgage broker over a bank.  Many times options that brokers find for borrowers are as competitive as those from a bank.  Be sure to work with a broker that is not taking abundance off the top before selling borrowers the loan.  In actuality, wholesale mortgage rates can often be cheaper than what borrowers can find at local banks.

Bank Positives

• Relationship building and the connection between community and your finances
• Adding to an existing financial profile
• Personal relationship with the lender

Broker Positives:

• Brokers do all the leg work
• Brokers compare rates from numerous banks and lenders all at one time
• More loan options available
• Can help with poor or tricky credit situations

Bank Negatives:

• More conservative loan options
• Lengthy and bureaucratic process
• Incompetence because of high turn over

Mortgage Negatives:

• May overcharge for services
• Access to select bank programs
• Lack of control for the borrower

Mortgage brokers are a great option for borrowers who are looking to compare multiple options all at one time without spending day in and day out searching around for available options.  Borrowers with excellent credit and a solid relationship with their banks may find that working with their bank to locate a mortgage is better for them.

Cross Country Mortgage in Brighton, Michigan provide mortgage services for clients including new home loans, refinancing, reversed mortgages, new purchase home mortgages and home equity loans to the entire Livingston County area including Brighton, Howell and Livingston County. Cross Country Mortgage Brighton, MI at http://brightoncrosscountry.com/.