With the financial markets in crisis and the cost of homes plummeting, the subprime loan options that were responsible for this crash in the first place are becoming less common. But there are still lenders offering these risky loans, and this article will convince you to avoid what may seem like an offer too good to refuse, especially if you are having trouble finding a traditional loan. Here are three reasons why you should avoid subprime lenders! High Interest Rates The most obvious reason to avoid subprime loans is the high interest rate that comes with them. In most cases, if you fall into the subprime category you represent a higher risk than normal for the lenders, and the increased rates protect their investment. Inevitably in this category a certain number of borrowers will default on the loans, and the higher rates ensure that the lender still makes money. This means that you will be paying more for your house than it may ever be worth, and it essentially no longer becomes an asset, but rather a liability. Questionable Business Ethics Another reason to stay away from subprime lenders is their track record of questionable business practices. The bailouts of […]
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Once your loan is approved, you will be ready to take the final step that will lead to the door of your new home. Many homebuyers are intimidated by the closing process, but it’s not as complicated as you may think. In fact, finding the right home is much more difficult than closing the deal. Making It Official The closing process begins with the borrower and lender meeting in the presence of a notary public. This is a person who is authorized to oversee, create or certify contracts, deeds and other legal documents. At the conclusion of the signing, the notary public will provide their stamp and signature, which certifies the identification of everyone present and the signatures on the loan application. Handing Over The Cash When you meet with the lender to close the loan, you will be required to produce your down payment and, if required, the closing costs. Ask your lender about acceptable payment methods, which may include a cashier’s check or other certified funds. If you have an account with the lender, a personal check may be accepted in some circumstances. Review The Loan Documents At closing, this will be your final opportunity to review the […]
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Your credit is one of the most important factors in qualifying for a home loan, and it will determine what sort of interest rate you are able to get. That interest rate can make all the difference when it comes to how much home you can afford and keeping your payments within your budget. If you have some credit problems, it’s a good idea to try to improve your score before you buy a home. Here are some simple ways to do that. Careful Use Of Credit Credit cards are unsecured debt, and a lot of that type of debt can make lenders nervous. If you are carrying high balances on your credit cards, paying them down can make a big difference in your score. It will give you a better free credit to debt ratio and show that you handle credit responsibly. When you are looking to buy a home, it’s a good idea to avoid taking on any new debt. Don’t apply for any more credit cards or increase the limits even if they are offered to you. Keep your credit stable and focus on paying off the debt you currently have. Be sure to make all of […]
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One of the hardest calls to make when it comes to buying a home is how much you want to spend. The larger the mortgage you take out, the bigger the payments will be. Of course, there is more to the cost than simply the amount of the mortgage, as interest plays a big role as well. How much can you afford to finance? Consider these important factors. How Is Your Credit? If you have great credit you are likely to qualify for the lowest interest rates. This means that you will be able to take out a larger loan, since the same monthly payment will get you more. More of the money you spend each month goes to principal, meaning you will also pay it off more quickly. People with credit problems will find that a larger amount of their monthly payment has to go to interest since they will get higher rates. This means that the amount you can afford to finance is actually lower. Look At Other Expenses Take a look at all of your monthly payments and debts that need to be paid off. Try to be realistic about what you can really afford to pay. […]
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When you are ready to buy a home, applying for a mortgage is one of the first and most important steps. For married couples, this usually involves applying for a mortgage loan jointly. This means that the loan will be in both of your names and you will be co-owners of the house. While it may seem like the obvious thing to do, there are a few situations when applying with only one name might be wise. Here are a few tips on joint mortgage applications. Is Your Credit Looking Good? If one of you has a poor credit rating, it could strongly affect your chances of qualifying for the loan and will definitely raise the interest rate even if you do qualify. If the person with poor credit does not make a large sum of money and their income is not required to qualify for the loan, it might make more sense not to apply jointly. Employment Doesn’t Matter If one of the partners is unemployed, a stay at home mom or dad or homemaker, or for any other reason, they won’t have much impact on the amount of money you can qualify for. That doesn’t mean you shouldn’t […]
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