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Bad Credit Home Loans – prior approval is still possible with adverse credit history

January 7th, 2011

If you are among the millions with less than perfect credit, there are many sources available to you in obtaining a mortgage. Lenders that specialize in mortgages for those with bad credit are competing for your business. The lender will analyze your credit report, credit score, debt-to-income ratio, and your employment history. You may also be asked to provide statements from your utility companies and other creditors to help form a complete picture of how you manage your finances. The lender will then inform you of how much you can afford to spend on a mortgage and the terms of the proposed home loan.

A bad credit home loan will naturally be made with a higher rate of interest than for those with good credit. Keep in mind that your home will still appreciate in value and after maintaining a good payment history for a period of time, you may be able to refinance your mortgage at a lower interest rate and lower your monthly payments. Along with making you monthly mortgage payments in a timely manner, you can also help improve your credit rating by lowering your current debts, avoid applying for more new credit, and keeping your credit card balances low.

In applying for a bad credit mortgage, ask your lender about the costs involved in obtaining the loan, the length and interest rate of your loan, and the ability to refinance at a lower rate down the road. Mortgages for people with poor credit are available through many lenders and with a variety of terms and conditions. Bad credit home loans can include a 2/28 home loan or a 3/27 home loan. The interest rate for a 2/28 loan is fixed for two years and fixed for three years in a 3/27 loan. This means that there will be a prepayment penalty during the first two or three years of the mortgage and that the home loan cannot be refinanced prior to that time.

Sub prime lenders will work with any credit score and income level to help you finance the home of your dreams at the lowest possible cost. Contact several lenders that specialize in mortgages for those with bad credit. There are numerous variations in the interest rates and terms offered by these types of lenders. Shopping around for a mortgage lender can save you thousands over the length of your home loan, even if your credit is less than perfectly.

To view our list of recommended bad credit or subprime mortgage lenders, visit this page: Recommended Bad Credit Mortgage Lenders.

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Prior approval of bad credit home loans

December 26th, 2010

Pre-approved bad credit home loans are home loans sanctioned to poor credit holders, on the basis of pre-approval. Getting pre-approved gives you an actual picture of the financial situation you are in and what your borrowing limit is. You can also form a clear idea of how much you’d have to pay every month if you borrowed as much as you want. This enables you to decide how much you can safely borrow and stay out of debt.

Pre-approval involves the process of submitting your financial information to your money lender before purchasing a home. Pre-approved bad credit home loans make the home buying procedure easy, saving money and time.

To obtain a pre-approved bad credit home loan, you should first submit a loan application to the lender mentioning your personal and financial needs. You also present copies of documents such as purchase agreement, tax returns, housing expenses, reason for poor credit, bankruptcy papers, and copies of credit reports. The lender verifies the application on the basis of your employment information, financial status, credit history, liabilities, and assets. After completing the application process, you will get a written document showing the amount, interest rate, and down payment according to the terms of the lender.

There are many lenders who specialize in pre-approved bad credit home loans. Depending on the lender, you are required to pay an up-front fee for processing, closing costs, and appraisal. Closing costs include title searches for deeds, processing documents, and legal fees.

Pre-approved bad credit home loans have numerous benefits. Once you are pre-approved, it gives you strong negotiating powers. The required time period for the pre-approval process varies from sixty to ninety days.

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A co-signer can help home loan approval!

November 21st, 2010

Many requirements are usually not met by main applicants but can easily be fulfilled by a co-signer. What one alone can’t get, can be achieved by the power of two combined. When you apply with a co-signer, his credit score, income, credit history, assets, etc. are also taken into account at the time of loan qualification and if either you or the co-signer fulfills a requirement, it is considered to be covered by the two of you.

Co-Signer: Concept

When you apply for a loan with a co-signer, he is responsible for the repayment of the loan as much as you. He is obliged by the same loan terms and is legally responsible just like you. If you fail to meet the monthly payments, the co-signer has to pay the installment since otherwise, the lack of payment will also be recorded into his credit history.

Being a co-signer implies risks. If you are asked to act as one, bear in mind that you will be responsible for the lack of payment of the main applicant and will have to substitute him or else the delinquency will be reported and added to your credit report. Moreover, the lender can take legal actions against you in order to recover his money. The lender doesn’t have to follow a certain order, he can choose between claiming you the money or the main applicant.

Requirements Not Met

There are income requirements for home loans that you may not be able to fulfill. When applying with a co-signer, the incomes are combined and if the addition of both meets the requirements you can get approved. In many cases, when it comes to couples the combined income can raise a bit the required minimum but it never reaches more than 20% more.

Credit requirements are also important when it comes to home loan approval. In this case instead of adding, the co-signer credit situation can replace yours and fulfill the requirements. If your credit score won’t allow approval, the co-signer’s score will be taken into account and if his reaches the minimum score required, the loan will be approved without hassles.

100% Financing

In many cases, in order to get approved for a home loan, a down payment is required. If you can’t provide a down payment, you can opt for requesting 100% financing on your home loan. But approval for this kind of loans is complicated. In order to guarantee approval you may should be applied using a co-signer. That way you will be able to obtain full funding for the value of the property without having to put money down.

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Loan Modification Programs – 3 Important Qualifications For Approval

May 5th, 2010

Trying to apply for a loan modification but worried about whether you will qualify? It’s true that not everyone will qualify for a loan modification to lower their payment-so how can you be sure to get your application to the front of the line and have the best chance for approval? Here are 3 Important Qualifications for approval you should know before you apply.

Loan Modification Qualification #1: You must be able to demonstrate to your lender that you have suffered a financial hardship that has made your current mortgage payment unaffordable. There are certain circumstances that lenders will consider as an acceptable hardship situation. Divorce/separation, military service, death of a family member, job loss, reduction in income, medical expenses, illness, incarceration and job transfer are all considered to be eligible for consideration. Loss of equity alone does not. There are three critical elements in an effective hardship letter-do you know what they are? Here is one tip-use the phrase “imminent risk of Default” and you will get your lenders attention.

Loan Modification Qualification #2: Can you prove to your lender that if given the new lower modified mortgage payment you will be able to afford to maintain it now and in the future? Lenders want to know that you will not be at risk of defaulting again. How can you prove this to them? Make it simple by providing the required financial statement that will demonstrate your ability to pay the new payment and help convince your lender to grant an approval for your proposed new lower payment. Your current mortgage payment, including your property taxes, homeowners insurance and any Homeowners dues, must equal more than 31% of your gross monthly income. Learn how to calculate your new target payment based on the Obama HAMP guidelines. If you are confused about how to do this, use the software program designed specifically for homeowners that automatically does all the calculations for you.

Loan Modification Qualification #3: Be able to submit an accurate, acceptable and complete application to your bank for review and consideration. Your lender will make a decision based in large part on the information you provide to them. Submitting an incomplete and poorly prepared application can result in a denial of the help you need. Be sure you prepare the paperwork properly and then submit everything your lender will need all together in a professional and acceptable loan modification package.

TIP: Make sure that you prepare your financial statement before you call your lender. Do not disclose any of your income or debts until you have taken the time to work on your budget-make any necessary adjustments and know that you fit into the approval guidelines. This is easy to do if you follow the directions in a handbook and software program that does all the calculations for you automatically. Simply input your own monthly income and monthly expenses and you will see immediately if you need to make some adjustments to your budget in order to meet the approval guidelines. You can avoid costly mistakes and save hours of frustration.

These are extraordinary times and more homeowners are faced with losing their homes than at any other time in our nations history. Borrowers who need help cannot wait to be rescued-help is available but you must know how to get it and be prepared to fight for your home. Start now by learning and preparing to submit your application to your lender to get the help you need and deserve. Billions of dollars in your tax dollars have been allocated for loan modification programs to help stop foreclosures. Don’t miss out on your chance to save your family’s home.

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Bank of America Home Loan Modification Approval

April 24th, 2010

With foreclosures at an all time high there are more options available for people facing the possibility of losing their home. Numerous lenders including Bank of America are offering mortgage loan modification for those in danger of being foreclosed upon.

There are a few things that you should do in order to ensure to qualify for a loan modification from a lender or Bank of America, they are as follows:

1. Find out the requirements that you must have from the Loss Mitigation Department. In order to get these requirements you must call they are not available online but if you just call the lender or Bank of America you can get these much needed requirements. If you try applying for a loan modification with no idea what the requirements you might as well not even bother.

2. You must write a hardship letter when applying for a loan modification. Do not attempt to apply for a mortgage modification if you have not prepared a financial hardship letter. It is considered your formal request for consideration.

3. Prior to writing your hardship letter look over your finances and create a new logical budget that will provide proof to the lender that once you modify your new loan you will be in good shape to pay it off.

4. You must remember to be as honest as possible when writing your loan modification hardship letter. Create an outline that you can use to show that once you get this loan you will be able to pay with no future problems. Showing the lender that you are committed to doing everything possible to keep your home will give the lender more faith that you will not default or fall behind on future payments again.

5. Never lie; it will just hurt you if you get caught. Lenders will not work with you if you are caught lying. It is not worth the possibility of being rejected just because you lied, whether big or small.

6. Finally when sending in your application make sure all of the necessary paperwork is included. By doing so the lender or Bank of America will be able to process your application faster.

If you just follow these simple steps you should not have any problems applying for a loan modification. Speak with a Bank of America representative and apply ASAP before it’s too late and you lose your home to foreclosure.

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