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/.

Refinancing With A Low Credit Score

Interest rates are at historic lows.  More homeowners than ever before are considering refinancing.  Think about it interest rates in 1998 for a 30 year fixed mortgage were on average about seven percent; today interest rates sit at an average of between three and three and a half percent.  That is a huge savings for homeowners not just each month but over the entire course of owning the home.  Refinancing allows homeowners to lower their monthly payment which can allow many to use the extra money for upgrades to the home that increase the value of the home overall.  One problem that plagues some homeowners is less than stellar credit.

Homeowners with poor credit ratings can have a difficult time refinancing their current mortgage.  Often this goes unrecognized until you begin the process of refinancing.  Homeowners often think they are basically refinancing the same mortgage amount just for a lesser interest rate so why does it matter if their current credit isn’t up to par.  For them it is the same mortgage just at a lower interest rate.  This however is not how mortgage lenders see it.

Credit scores are used to determine an individual’s ability to pay debt back in full.  A low credit score gives lenders the impression that you are taking on too much debt for the income that you have coming in.  The snap shot of your current financial situation puts you at a higher risk then when you financed your original mortgage.  The scores of an individual’s credit can range between three hundred, at its lowest, to eight hundred and fifty, at its highest.

Homeowners will pay lower interest rates with higher credit scores.  With less than stellar credit it’s important to make sure that the savings you are looking for with the lower interest rate will really exist for you.  You need to consider the actual rate you will be given.  A homeowner with an eight hundred and fifty credit rating will receive a lower interest rate than those with poor credit.

Refinancing doesn’t always make sense for homeowners that have poor credit after they take into consideration an extended loan term, closing costs, loan fees, and more.  When combining these concerns it maybe that refinancing actually increase the overall cost of your mortgage even with the lower interest rate.

When your credit is less than perfect it is especially important to work with a mortgage broker to find the mortgage refinancing option that works best for your situation.

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/.

Seeking Out Non-Traditional Financing For Mortgages

There are times when an individual’s credit rating doesn’t match their intentions.  When a borrower has met with the unexpected in life such as a divorce, medical bills, job losses or poor money management it can wreak havoc on their opportunities to get financing.  This can deter many individuals, especially when wanting to obtain a mortgage, discouraged.  The thought is that people with poor credit will never achieve homeownership however this is not necessarily the case.  People seeking home ownership with less than perfect credit should work with a mortgage broker to search out non-traditional methods and more creative financing to obtain a home loan.

The first step that people with poor credit should do when considering the possibilities of a future home purchase is to start to take steps to improve their credit.  A lengthy history of delinquent payments isn’t a good thing but the change in those habits can be.  A change in the habits you have with your bill paying can help creditors see that you are working towards change.  Start by resolving to pay down debt to less than thirty percent of your available credit line.  Don’t apply for more credit, pay creditors on time and eventually you will start to improve your credit score.

Mortgage lenders will want to see that you have history making a payment for housing.  It may make sense to rent for two years to establish a housing payment history.  During that time make sure that the payment for your rent is paid for on time, every month.  An occasional late car payment or credit card payment could be overlooked but it is crucial that mortgage lenders see your ability to pay housing consecutively for at least two years prior to receiving a mortgage.

During the time you are renting, work to save money for a down payment.  The larger the down payment on the home the more vested lenders will view you.  A solid down payment for a first time home buyer is twenty percent even though there are mortgage options that don’t require this large of a down payment it helps those with poor credit.

Another feasible option for homeowners with imperfect credit is to find a lease option that can lead into the possibility of ownership.  Motivated sellers can often be talked into a purchase agreement with an unconventional twist.  If you find the right seller you can even work in a deal where they use the money paid on leasing as payment towards the home.

A mortgage broker is the first individual that most individuals with poor credit should speak with before even thinking about looking for a home to buy.  Loan brokers have seen it all, more than your credit situation is not unique.

Prepare For the Spring Real Estate Rush

When it comes to real estate the busiest buying season of the year for residential real estate is the spring.  The long northern winters make buyers and sellers alike ready to take advantage of the nicer weather and jump into the real estate market.  No matter whether you are a first time home buyer or you have been in the market awhile there are some essential home buying tips to follow in order to ensure you find the home of your dreams.

Tip #1 For Buying A Home:  Enlist the Assistance of a Professional Real Estate Agent

When it comes to buying a home it is important that you enlist the help pf a professional real estate agent.  It is important to find an agent that is local to the area that make the challenge of narrowing down your search for the perfect home a whole lot easier.  Real estate professionals have the inside scoop on homes in their market this is incredibly crucial when looking for a home during the spring when the market is active and full of buyers.

Tip #2 For Buying A Home:  Make a List of That Includes Your Needs and Wants

Understand what you need and want in a home.  A home isn’t only about the actual house it is a total package the neighborhood, the property and more.  Some needs may be a certain number of bedrooms and bathrooms, a garage and a fenced in yard.  Wants are things that aren’t needed but desired such as a gourmet kitchen, a weight room or an in-ground swimming pool.

Tip #3 For Buying A Home: Get Pre-Qualified For a Mortgage

Sellers are more apt to approve an offer from buyers who are already pre-approved.  It is also an important measure in the hunt for the perfect home.  A mistake that buyers often make is over estimating just how much they can afford.  Meet with a mortgage broker as soon as you start thinking about purchasing a home.  Mortgage brokers will give you several mortgage options for your financial situation which will allow you to know the price range of homes that you should be looking at.

Tip #4 For Buying A Home: Keep Your Numbers Top of Mind

Don’t assume that the mortgage payment is the only payment that will increase when you purchase a home.  You will not only need to know the monthly payments it will be important to know the cost of PMI, primary mortgage insurance, the tax expense, water and sewer bills, extra utility costs and more.

Tip #5 For Buying A Home: Prepare Documentation Ahead of Time

In order to ensure the entire process of finding a home and financing that home is smooth buyers should prepare for the onslaught of paperwork.  Begin the process by compiling needed documents into a single location.  You will want copies of government issued identification, tax returns, pay stub information, bank statements, investment documentation and anything that stats your income and debt.

These five tips can make the home buying process a whole lot simpler.   No matter if you are a first time home buyer or have been a part of the real estate market for a number of years these tips can help make sure you get the home of your dreams.

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/.

Mortgage Brokers Bridging The Gabe Between Lenders and Borrowers

Let’s face it most of us are not the ideal borrower.  We don’t all have good credit ratings, substantial down payments, low debt to income ratios and more.  In fact most borrowers have credit problems and obstacles to overcome when trying to meet lender requirements especially when seeking to refinance or to obtain a new home mortgage.

There are however, solutions to these common problems faced by both mortgage lenders and borrows.  A mortgage broker can often help assistance to bridge the gap between lenders and borrowers.

Blemished credit is a common issue that can occur when borrowers have had issues making payments to past creditors.  If you have a history of non payments, late payments or accounts that are delinquent you will have to face these problems head on.  When your credit is evaluated lenders will see these blemishes negatively and may be reluctant to approve your loan.

There is not a sure fire way to improve your credit score immediately.  It will take some time but if you take action sooner than later it will show lenders that you are serious about getting your credit history together. Be upfront with your mortgage broker so that they can address your credit issues head on when looking for a home loan that works for you both.  Offer an explanation as to why there were issues in credit such as the loss of a job, a serious illness or other event that resulted in the inability to pay your bills on time.  Mortgage brokers may suggest that you seek out a cosigner for your mortgage.  This person should have an exceptional credit history along with a high credit rating.

If you are seeking to buy a fixer upper or cooperative apartment it will be difficult to find a lender.  The reason is that there are already complexities when it comes to buying into cooperative living situations.  The mortgage on a cooperative apartment is different than that of a standard mortgage.
Homes that require a great deal of repairs before they are considered safe are also hard to get mortgages on.  These repairs can be quiet expensive and often exceed three percent of the homes overall value.  This makes getting a mortgage loan problematic.  A lender may be more apt to present a borrower with the option of two separate loans.  A mortgage may be given to purchase the home and a construction loan to make necessary repairs and improvements.

More issues that can cause borrowers headaches in lending are:

A low appraisal on the home
A high debt to income ratio
A low income

Don’t let these issues worry you.  Strap on your creative boots while working directly with mortgage broker that has connections within the lending industry to seek the best mortgage option for your situation.

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/.

Finding A Reputable Mortgage Broker This Spring Buying Season

When it comes to finding a mortgage broker there is a huge difference between finding one that is looking out for their clients best interest verse one that is looking to pad their own pocket.  One way to start the process of finding a mortgage broker that is reputable, reliable and working to ensure you get a mortgage that best fits your needs is to ask your real estate agent,  friends, family, co workers and other homeowners for recommendations.

It is crucial that you look for a specialist that is offers experience on top of patience.   This is especially true if it is your first time looking to finance a home.  Working with a broker that takes their time and can explain complicated financing in terms you can understand is vital.  A broker that doesn’t take time to help you understand the home loan process as well as the different loan options available isn’t worth a dime of your money.

From the recommendations you are given start out interviewing two or three prospective mortgage brokers.  Find out about their past experience and certifications.  Ask about the number of residential mortgage loans they have brokered specifically for homeowners in situations similar to your own.   Will they be able to broker a deal on an FHA loan or a government backed home loan?  When interviewing perspective brokers ask for the names and numbers of references.  Make the call to ask the references how satisfied they were throughout the process and if they are happy with the loan options they were given and finally settled upon.  Talk about their communication with the broker.  How accessible was the broker at various times during the mortgage process.

Many new homeowners don’t understand the difference between mortgage brokers and mortgage lenders.  Some homeowners choose to work directly with a bank, credit union or commercial lender.  If you decide to get a mortgage directly through a financial institution you will be dealing with one person, mortgage banker or loan officer.  The duties are similar to that of a mortgage broker however they don’t search for loan throughout the entire loan market.  Instead a loan officer only offers mortgage options from the financial institution they represent.

The loan officer, like a mortgage broker will help facilitate paperwork, applications and appraisals.  Once you choose a bank to work with however you are stuck with the loan officer they give you unlike if you were working with a mortgage broker.  There is not as much client control or personal contact when working with a loan officer.  Many work mainly from email.  Whereas when working with a mortgage broker you get plenty of individual contact as the broker works directly with you to understand your specific situation.  They build a list of options from several lenders for you to choose from, offer the benefits and drawbacks of each mortgage option.

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/.