Monday, February 9, 2009

Refinancing Your Home Even With Bad Credit

If you have bad credit, attempting to refinance your mortgage loan can prove to be a frustrating, maddening and even a humiliating experience. You would love to take advantage of a refinance in order to lower your mortgage payments, but find it difficult because your credit score is just too low. It is tempting to give up, but it is not necessary, because there are ways to refinance your mortgage loan even with bad credit.

Before you begin your quest to obtain refinancing for your current loan with poor credit, consider two things. First, consider using a mortgage company that specializes in bad credit mortgage financing. Secondly, do whatever you can to clean up your credit report before you attempt to refinance your loan.

Because traditional lenders may shy away from refinancing individuals with poor credit scores, it might be a good idea to find a lender who specializes in bad credit refinancing. However, it would prove wise to try traditional lenders first, while avoiding lenders that you know very little about. Often times, traditional lenders have special programs for individuals with bad credit ratings.

Lendingtree.com would be a good example of this, because they are a traditional lender with a special program for people rebuilding their credit. You can get a free quote with no obligations. Do note, however, that you will end up paying higher interest rates when you refinance with whoever you choose to refinance your loan with due to a low credit score.

Another important step in securing a bad credit refinance is to fix any credit problems that you can. This will increase the likelihood of you receiving better terms. Obtain a copy of your credit report from the “big three” credit bureaus. Scan it carefully and look for any mistakes.

If you find any, notify your creditors or the bureaus immediately. Also, if possible, try to pay down any credit cards that are near their lending limits. This makes you look better to the mortgage lender. Remember, just do what you can and then carefully and methodically research possible mortgage refinancing companies.

Refinancing you mortgage loan with bad credit can be a frustrating experience. However, like with most things, a little patient, persistence and resourcefulness will bring you closer to finding refinancing terms that work well for you.

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Identifying Predatory Lenders

Predatory lending consists of abusive practices by lenders within the mortgage industry. These types of lenders strip borrowers of the equity in their home and put them in danger of foreclosing on their home. But one does not have to fall victim to predatory lenders. There are tell-tale signs that everyone should be aware of to help them avoid falling prey. They are listed below:

1. Be wary of and avoid any lender who encourages you to lie on your loan application.

2. Be sure that you are given all disclosures. Check your loan papers and be sure that the Good Faith Estimate, Special Info Booklet, Truth in Lending and HUD-1 Settlement statements are all included.

3. A red flag should be raised if any lender asks you to leave signatures or other line-items blank. Also re-check your documents to make sure that nothing has been altered or changed without your knowledge and/or approval.

4. If a lender asks you to repeatedly refinance and after each instance your monthly payments and total loan amounts increase, you may be dealing with a predatory lender. Shop around and get a new lender as soon as possible.

5. Check the fine print. If you are required to pay daily interest whenever your payments are late, you may be dealing with a predatory lender.

6. If your loan amount is higher than the value of your home, this is reason to give pause and to be alarmed.

7. Be wary of unexpected settlement costs that you were not given prior notice to or explanation for.

8. If your monthly payments or loan is higher than you anticipated based on the disclosures, you might be dealing with an unscrupulous lender.

9. If your mortgage loan requires a balloon payment that requires that the final lump sum be financed with that lender, you may be dealing with a predatory lender.

10. You are not required to buy credit insurance or insurance that will pay off the loan if you die or are disabled. If you are heavily pressured to do so, beware.

Buying a home may be your most expensive and prized possession. There is a lot riding on choosing the right lender. Your credit score, your hard earned cash, and your ability to borrow money in the future are all at stake. This is why it is very important to screen and get rid of lenders who are looking to dupe you out of your money and your home.

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How Much Mortgage Can I Afford?

Shopping for a home can be an exciting time in one’s life. There are so many things to consider; how many rooms, how many bathrooms, the neighborhood and the school district. However, perhaps the most important consideration is how much house one can afford. The general rule of thumb is that most homeowners can afford a mortgage loan that is 2-2.5 times their gross income. This means a family with a household income of $100,000 could probably afford a $200,000-$250,000 home. Of course this is generalization. There are other factors to take into consideration.

When lenders are considering potential buyers they look at more than just their gross income. They also look very closely at the buyer’s front-end and back-end ratios, as well as the amount of the down payment they can afford. We will take a closer look at what these factors are and why they are important.

1. Front-end ratio: The front-end ratio is the percentage of ones’ gross income that will go towards the monthly mortgage payment. The mortgage consists of principle, interest, taxes and insurance. Most lenders don’t want to see the front-end ratio higher than 28%. This means that the mortgage payment should not exceed 28% of ones’ monthly income.

2. Back-end ratio: The back-end ratio is the percentage of ones’ gross income that is required to cover debts. This includes the mortgage, credit card payments, child support and the like. Most mortgage companies would like to see this ratio stay below 36% of ones’ gross income.

3. Down payment: Lenders would like to see a down payment of at least 20%. A down payment of this amount will allow the buyer to skip out on paying expensive mortgage insurance.

Purchasing a home can be a very satisfying experience. It is a life-long dream for many and a great accomplishment. However, it can also be expensive, so ones’ total financial situation must be taken into consideration. One must not only consider ones income, but also expenses, debt, lifestyle and personality. Only after these things are carefully and completely considered is one ready to purchase a home.

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Auto Insurance Quote: Should I Include My Children When Getting A Policy Or Purchase A Separate One?

Parents can consider car insurance as expensive. But when the safety of your children is on the line, the cost does not really matter at all. However, there are factors involved when deciding to whether to include your children when getting a policy or purchase a separate one. And sometimes, the decision to make is a bit confusing.

To make your decision making easier, you have to weigh the following factors and decide which is most advantageous to you:

Cheaper rate – Auto insurance companies always offer cheaper rate when the added vehicle's insurance is purchased under the parent's policy. Also, it is assumed that younger and single drivers are more prone to accidents than older and married ones. So if your child will buy auto insurance under his or her name, he or she would certainly pay more money.

Discount – If you own one car in the past and have added another one, you can certainly have a multiple car discount under the same company. Added to that, you can also have a significant great student discount if your child is still in school.

Higher limits of liability – When you purchase your child's auto insurance under his or her name, your natural tendency is to lower the premium and thus, lowering the limits (regardless of who is going to pay). However, if you decide to add your child's vehicle under your policy, your child's vehicle would automatically assume the same limits of your vehicle's coverage. Of course, since you have personal assets, you can have higher limits of liability and thus making your child's vehicle more covered under your name.

Control – Given that you own the policy, you will certainly have the first hand knowledge on the communications and notices released by the auto insurance company.

Liability and Responsibility – In the event of an accident and your child is at fault, you will assume the whole responsibility if his/her auto insurance is under your policy. There is a possibility that your assets will be exposed. You can also be sued in the event of an accident even if your child is to blame. One the other hand, you can spare yourself with all of these if you decide to buy him auto insurance under his or her name.

Surcharges – Since you own the policy, once your child is involved in an accident or have been cited with traffic violation, all the negative effects will go against your policy and thus, crippling your status as a policyholder. Sometimes if the offense is great or the incidents are frequent, there is a possibility that your policy may be cancelled. The bottom line is, you will assume the responsibility of your child's actions.

Learning process – In one way or another, your child has to learn things including learning how to purchase his or her own auto insurance and the duty that comes with it.
Since you know your child better than anybody else it is important to realize these factors before deciding on the choice you have to make. The decision therefore on whether to include your children when getting a policy or let him or her purchase a separate one is one that deserves careful consideration.

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Why Mortgage Insurance Can Actually Save You Money

Mortgage insurance provides lenders a form of financial guarantee which covers the lender in cases in which the borrower defaults on a loan. For those looking to buy a home, agreeing to loan terms which include mortgage insurance, increases the purchasing power of the buyer a great deal.

Agreeing to buy mortgage insurance allows individuals the opportunity to buy a home with a down payment of only 5%-10%, as opposed to the 20% that is often required when the lender does not have the guarantee of mortgage insurance.

Buyers typically purchase and pay for mortgage insurance in three different ways. These ways include paying in annuals, monthly premiums, or singles. We are going to take a closer look at the available mortgage insurance payment options below:

1.) Annuals: The annuals payment option allows the lender to collect the first year’s premium at closing and then all subsequent payments are made on a monthly basis.

2.) Monthly Premiums: This payment option requires the buyer to only pay for one month at closing and all remaining payments are then made on a monthly basis.

3.) Singles: The singles payment option requires the buyer to make a one-time single payment that is typically financed as part of the mortgage amount.

Mortgage insurance ensures the lender is covered in cases in which the borrower can no longer pay the loan and defaults on it. It is also a powerful bargaining tool for potential borrowers who are unable to come up with a large down payment. Offering to pay mortgage insurance can decrease the amount of ones’ down payment by 10% to 15%.

But it is important to note that mortgage insurance does not have to be paid forever. After a certain period of time and when certain conditions are met, mortgage insurance is no longer required to be carried on the mortgage.

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