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In these economic crunch times, it is still possible for a new homeowner to obtain a mortgage for bad credit, or even to refinance a home in order to have access to cash for renovations or simply for day to day living. Honesty when applying, as well as patience and knowing that it is often necessary to approach and apply to several mortgage brokers and lenders, is the key to obtaining a mortgage for bad credit during this present economic situation.
Beware of unknown firms or individuals which advertise guaranteed results for obtaining a mortgage for bad credit while taking a large up front application fee. Such agents are most probably not able to assist applicants in any legitimate way, and the unsuspecting mortgage applicant who pays the up-front fee could even be enticed to participate in illegal activity such as inflating the value of a property to obtain a larger mortgage for bad credit.
Therefore, before applying for a mortgage, applicants are advised to do their best to repair any truly negative items on their credit reports and to wait until their reports are updated to show evidence of this real improvement. It is especially important for applicants for a mortgage for bad credit to check their credit records for any errors and to make sure that they have these errors corrected by the credit bureaus that are reporting the discrepancies.
Professional credit counselors, who like mortgage brokers and advisors should be verified as true professionals, can be of assistance if notifying the credit bureau is difficult or does not bring the desired results in time for the applicant to be able to apply for the desired mortgage for bad credit. However, if there is a recent default or late payment that appears on a credit record and that cannot legally and honestly be removed or disputed because it occurred.
It is best for
the applicant to wait until the damage from the adverse event can be mitigated. Applicants for a mortgage for bad credit are usually given a greater chance of approval if they wait at least two or three months after their most recent delinquency before applying – and of course it is a must to avoid any further delinquencies during the waiting period.
Fees and Penalties
Of course no buyer expects to make a late payment, but job loss, family emergency or illness can sometimes cause even a responsible homeowner to make a late mortgage payment. Sometimes, a mortgage for bad credit will include especially steep fees and penalties for even a single delayed payment.
Therefore, unless the terms of the mortgage are otherwise very appealing, or the home buyer has enough savings or credit insurance to make the chances of a late payment almost nil, the possibility of having to pay a high fee should be weighed against the chances of obtaining a better mortgage for bad credit from another lender.
With the overall economy improving, it is very possible that a home buyer who obtains a mortgage for bad credit will be able to refinance his new home at more advantageous terms in two or three years. Some mortgage lenders are only too pleased to have a subprime loan paid off early – but others build their business on the high payments that high risk mortgages provide for them and they therefore charge high prepayment penalties to replace the profits they would have made had the original loan and its higher payments and fees been maintained for its entire term. Young first time home buyers are especially advised to avoid any mortgages for bad credit which include a prepayment penalty clause that calls for an overly high penalty. The length of time before which the penalty no longer applies or is reduced is also an important factor to check when evaluating options for a mortgage for bad credit.
With proper research and advice, finding a mortgage for bad credit is usually a successful process that allows applicants to buy homes that they may have thought were beyond their reach. However, it is important to engage only competent and ethical mortgage advisors, and to read the terms of each and every mortgage for bad credit that is offered before making a final decision. Those with good credit scores should have no problem refinancing and saving a bundle, but if you have bad credit and are looking for a bad credit home loan refinance the picture is a bit different. If you are able to lower your interest rate (and monthly payment) then mortgage refinancing might make sense for you. Depending on the amount of the loan you’re refinancing a simple 2-3% change in the interest rate could save you hundreds of dollars a month in mortgage payments.
Why not take the time to investigate a home loan refinancing for yourself. A few hours of work could add a significant amount of money to your monthly budget. You should always be careful when looking to get a bad credit home loan refinance. Never appear desperate and don’t let a mortgage lender rush you through the process.
If you’re patient and take the time to investigate several bad credit refinancing companies you’re sure to find a suitable loan that will save you money. A 125 home equity loan will allow you to borrow more than the equity value of the home. In fact, it lets you borrow up to 125 percent of the homes value.
Many refinancing lenders have stayed cleared of this type of loan sine part of it is unsecured, however an increasing number of online lenders are offering 125 home equity loans. Traditional Home Equity Loans vs. 125 Home Equity Loans When securing a traditional home equity loan the lender will offer a loan not to exceed the equity value of the home.
Those starting a business or using the cash for large home improvement projects can benefit from this type of unsecured home equity loan. As long as the value of your home continues to rise you’re in little danger from the 125 home loan, however if home values decline you could end up owing more than your home is worth.