Home Mortgage Loans for People That Are Self-Employed

For self-employed borrowers getting a mortgage can be challenging. Although it is generally harder to prove your income, it does not have to be a nightmare. There are, in fact, several ways for you to qualify for a mortgage. Below are the three most common ones:

1. Two Years Tax Returns

First, a lender will look at your average income based on two years tax returns and a year-to-date profit and loss statement. This option is step one, but more than likely, your accountant helps you write off enough deductions to show very little income. This is great for taxes, but it makes it difficult to prove you can support the loan you are applying for.

2. Stated Income and No Income Verification Loans

These loans do not require you to document your income at all. Stated loans basically give you the right to "state" a reasonable income on your application that will not be verified, while no-documentation loans are based on your credit history alone. Since lenders take a risk when they do not confirm your income, you will be penalized with a higher interest rate to compensate for that threat.

3. Bank Deposit Income

Another way that lenders are now using to qualify self-employed borrowers is to consider your bank deposits. If you are depositing your earnings into the bank, lenders can come up with a twelve month deposit average and use that as qualifying income. As a rule, these loans have lower rates than the types of loans where you verify no income at all, and in some instances you will get a rate closer to conventional fixed rates.

Knowledge of these various options should ease your mind, and ensure you that there will be a way for you secure your needed mortgage loan.

Problem Remortgage - Easy Way to Deal With Your Bad Credit

If you are among those who have been tagged as bad credit, then you may find a problem in getting a remortgage loan. But now with your adverse bad credit you can opt or the problem remortgage.

The term problem remortgage is used for the borrowers who are facing the bad credit history like CCJ's, IVA, defaults, arrears etc. The research in the UK has demonstrated that the 1 in 4 people are categorized as bad credit. So, no more worries! As problem remortgage loan is designed for the bad credit borrowers so that they can avail the specified interest rate.

Remortgage loan means that borrower replaces his existing mortgage loan with the new loan. Borrower can avail the remortgage loan either from the existing lender or new lender. While dealing in the remortgage transaction the old mortgage will be paid off by the new lender as lender is secured against the home of the borrower.

The person is tagged bad credit borrowers only when he has missed the payments on the previous debts. The bad credit borrower usually suffers from the higher interest rates as the lender has to bear the high risk. But your proper research can land up you in the best deal.

Remortgage can be worth considering, if your mortgage value has risen in the last few months, as with high value you can always get lower interest rate for the flexible term. The loan amount approved under the problem remortgage depends upon the borrower monthly income, repaying capacity and the last bank statement

The problem remortgage is used for the various purposes like the lower interest rate, consolidating the debt consolidation, remodeling your home, or buying the car. The problem remortgage helps the borrower to reduce his payments and helps him to save up to £100 to £200 every month.

With its offers like fixed rate, interest only, buy to let, capped, discount and variable interest rates, etc borrower can manage the loan in easy way and tries to re-establish his credit rating.
Today the problem remortgage loan has gained its popularity in the market. The borrowers who have been marked as bad credit also enjoy the great flexibility in the terms of repayment and interest rate.

Mortgage Brokers - Should You Use One?

Mortgage brokers have become more popular for consumers to work with than ever before. Rather than do the research, and investigating of available mortgage loan options themselves, many are choosing to let a mortgage broker do the leg work.

What exactly does a mortgage broker do, and what are the advantages and disadvantages of working with one?

It's very simple really; mortgage brokers find, and acquire loan money from lenders, tack on a little something for their time and trouble, and then sell the loan money to the borrower. They are the consummate middlemen in the mortgage loan process.

Now, you might be asking yourself why use and have to pay for a middleman when with a little effort you can do this yourself?

Let me try to explain.

Say for instance, you are looking to buy a new washing machine. You shop around visiting the major washing machine manufacturers that are accessible to you, such as Whirlpool. You have looked at a number of different models, but overall what you have seen is not that impressive. You can't seem to find one that offers all of the different features you want.

As a result, you find yourself going to a large consumer products retail store. Best Buy offers Whirlpool washing machines too, but they also offer various types of washing machines from a variety of other manufacturers. Having access to many different types of washing machines all in one place, makes Best Buy your best bet to find a washing machine to fit your specific needs.

Similarly, by going directly to the lender they will have access to only their products, which may or may not be the best product to meet your needs. However, should you go to a mortgage broker with access to many different lenders, and who by the way, is considerably more familiar with the lenders and their products than you could ever be, there is a strong chance you will be able to find just what you are looking for in a mortgage loan. The advantages of dealing with a broker are especially valuable to borrowers who are searching for something other than the standard ARM, or fixed rate mortgages.

Another terrific benefit offered by a mortgage broker is the fact that they will take care of all the necessary paperwork for you. And should you have any questions, the broker will be much easier to contact than a loan officer.

Is there a downside? There can be. Because there is very little regulation at both the state and federal level, a dishonest broker may give you a bad deal. You can virtually eliminate this risk by getting a mortgage broker recommendation from your local Better Business Bureau, your states Real Estate Commission, perhaps even your lawyer, or banker.

Copyright 2007 Carl DiNello

Poor Credit Mortgage Loans - 4 Things You Can Do To Increase Your Chances of Getting Approved

Just because you have poor credit, it doesn't mean that you can't get a mortgage; you just need to work harder at getting approved. There are several resources available to you and there are several strategies that you can use to increase your chances of getting approved for your mortgage.

1. Completely Fill Out Your Application

This often sounds like common sense, but if you take the time to completely and legibly fill out your loan application it makes it easier for the lender to process the application. If you leave any blanks then the lender will have to call you. The lender will also need to verify all of the information that is on the loan so you must make sure that it is correct and that everything is spelled properly.

2. Offer a Higher Down Payment

The best thing you can do to improve your chances of approval is to have a good down payment. The lower your credit, the higher the down payment will have to be. This may mean that you need to wait a couple years and work on saving up enough money to make a good down payment. If you credit score is below 600, then you are going to need to have at least 5% for a down payment. If your credit is lower, your down payment will need to be higher. A down payment of 20% will help you avoid private mortgage insurance, which will save you a ton of money in the long run.

3. Get Pre-Approved

Pre-approval is always a good place to start. If you have a down payment and you have filled out your loan application you will get a good idea of how much you will be able to spend on a home. Remember, it is very important that the lender treats your pre-approval in the same manner as they would any other lender. You want to be certain that just because you have a low credit score they are not being diligent with your application. Many lenders will issue pre-approvals that are not completely researched and you don't want a false sense of spending ability when it comes to your home.

4. Steady Income

Your income will mean a whole lot, especially if you have a poor credit. Be certain that you have held your job down for a considerable amount of time and that you can show a good, consistent income. Avoid making any expensive purchases prior to buying your home. The new car, boat or other toys can wait until after you have been approved for your mortgage and you are moving into your new home. Making these large purchases will reduce your cash assets and will increase your liabilities. When you go to purchase a home you do not want any unnecessary liabilities.

Houston My Community Mortgage Information

The Texas My Community Mortgage program was introduced in 2000 by Fannie Mae. This program is designed to make it easier than ever to afford a home! In many cases these loans are made with a small or no down payment. (Up to 100% LTV loans) The rules for credit history are less restrictive than what most lenders require, and the finance rate is low. There is flexibility on income source which includes counting boarder income from relatives or non-relatives. Mortgage insurance (PMI) requirements are low and that helps keep the monthly payment low. The program is also available for 2, 3, or 4 unit properties for customers that want to live in one unit and rent the others out. There is an automated underwriting that results in a fast loan decision in most cases. This is a program that says YES for many issues that other lenders won't accept. The result is home loan approvals for many family's that would otherwise not be able to own a home!

There are a variety of program options available including fixed loans for up to 40 years, variable options, and initial interest only. There is also an option for a 2-1 interest rate buy down to make your payments extra low the first 2 years. Condos and co-ops are eligible. For 2007 the Houston area the My Community Mortgage household income limit is $60,900. The maximum loan size is limited to $417,000.

Texas residents can find more information at my Houston My Community Mortgage website. You can also call my office at 281-537-2700.

Mortgage Refinancing – When Is The Best Time To Get An Interest Rate Quote

Mortgage refinancing can save you thousands of dollars if you take the time to research mortgage offers. Mortgage rates fluctuate on a daily basis and the time you request a quote can make a difference. Here are several tips to help you find the perfect mortgage rate when refinancing your mortgage.

The best time to request a mortgage rate quote is usually after 9am EST. The reason for this is that government economic reports are typically released around 9am on the east coast. If you check too early in the morning many lenders may not have priced their rate sheets for that day. Check too late in the afternoon and the markets may already be closed meaning you'll have to wait until the next morning to get your rate quote.

The mortgage rates you see published in the newspapers are several days old and not worth your time. Because of this delay in publishing don't expect to get the rate you see printed in the paper when you call your loan representative. When shopping for a mortgage rate quote get your quotes on the same day and try to collect them at the same time of day.

Comparing rate quotes from different loan programs is meaningless when comparison shopping for the best loan. Always compare rate quotes from one loan program and make sure you get a quote for all lender fees associate with that interest rate. This means if you have to pay two points upfront to qualify for a given mortgage rate, this is important information to know when comparison shopping. You can learn more about your mortgage options, including costly mistakes to avoid with a free mortgage tutorial.

No Closing Cost Mortgages - Are They a Bad Deal?

What is it?

What's considered acceptable and appropriate is very different for everybody, therefore this question does not have a simple answer. However, there are some important aspects of this scenario that should be considered by all potential borrowers before they sign on the dotted line.

Very simply, a no-closing-cost-mortgage is one into which the lender allows the borrower to roll into the borrowed principle all of the ordinarily out-of-pocket costs associated with settlement. This concept is most attractive to first time home buyers, or buyers who have failed to set aside enough money for settlement.

When it comes time for settlement, the lender will simply increase the total amount borrowed by the total of the buyer's closing costs. Instead of the buyer directly paying all required fees, the mortgage company will pay those on his behalf.

Is this a good idea?

Most borrowers are attracted to this concept because it allows them to retain all of the money they'd saved, which would likely be better spent in another manner. It's important for the borrower to acknowledge that these additional monies added to the loan will actually cost significantly more over the course of the mortgage than if they had simply been paid with cash at closing. The mortgage interest rate will be applied to the entire balance of the loan, which will then include the closing costs.

However, despite the fact that borrowers understand this concept, the majority of them still choose to roll settlement costs into the loan because their main focus is the monthly payment; when borrowing hundreds of thousands of dollars, adding a few more over the course of 30 years results in a barely noticeable payment increase.

How Do Adjustable Rate Mortgages Work?

An ARM, or adjustable rate mortgage, is a mortgage financing option that comes with an interest rate that fluctuates over time. Normally, the interest rate will adjust once every six or twelve months. However, there are mortgages of this type that may change more frequently.

The mortgage interest rate for an ARM is linked to an index such as the one-year US Treasury bill, or The London Interbank Offered Rate Index (LIBOR). When the interest rate of the linked index raises or lowers, so will the interest rate of the adjustable rate mortgage.

How does this affect the borrower? This means that the monthly mortgage payment will also rise and fall right along with the interest rate of the index. This fluctuation can cause serious problems for the borrower. Many borrowers cannot afford to live with the uncertainty of changing payments. Should the borrower have chosen the ARM in order to qualify for an affordable mortgage, what happens if the interest rate shoots up? Should the increased payments become too much, the borrower may find themselves being forced to sell their home.

If interest rates were to go down however, the monthly mortgage payment may decrease considerably. The borrower can now enjoy the benefit of a lower interest rate and mortgage payment without having to refinance.

The most appealing benefit to an adjustable rate mortgage is the lower beginning interest rate when compared to a fixed rate mortgage. This means that the borrower can receive more money while maintaining the same monthly payment. More money translates into more house. Very appealing! Of course, should interest rates raise considerably the borrower may find themselves no longer able to make the higher payments.

Lenders are willing to offer a lower rate on ARMs because the borrower accepts the added risk associated with an adjustable rate. The borrower must read the loan documents very carefully and completely understand how much the interest rate can rise. Ideally, a borrower would like the ARM to contain a Periodic Rate Cap, a Lifetime Rate Cap, and the option to refinance to a fixed rate at any time during the lone term.

What is a Periodic Rate Cap? The Periodic Rate Cap will limit how much your interest rate can increase in any one cycle. For example, should your interest rate be adjusted annually and your Periodic Rate Cap is 2 percent, then even if interest rates were to rise by 3.5 percent, your mortgage rate could only be increased by 2 percent each year.

What is a Lifetime Rate Cap? This type of cap sets a maximum limit on how high the interest rate can be raised during the life of the mortgage loan. For example, should you take out a mortgage at 6.25 percent with a lifetime cap of 6 percent, the highest your rate could ever go would be 12.25 percent.

By today's standards that may seem to be a very high rate. However, in the early 1980's interest rates were as high as 16 percent. Should the economy cause that to happen again, a borrower with a mortgage loan like the one used in our example would be in good shape because their interest rate could only go as high as 12.25 percent.

Usually, the initial rate offered in an adjustable rate mortgage remains fixed for a set number of years before beginning to adjust. The period may be anywhere from two to seven years.

This is a great advantage to homeowners who plan to stay in their home for only a short time before moving. They are in the position where they can enjoy the benefits of the lower "teaser rate", that results in a lower mortgage payment, and then sell the house before the interest rates have a chance to rise.

Copyright 2007 Carl DiNello