8:16 AM
ENSA MAROC
It's been
years since you made any major improvements to your home and it's about time.
Your spouse and children are also urging you to give the house a facelift. So,
what do you do? Dip into your savings? Great! But that's only if you've enough
stashed away in there. Go in for a regular loan? But you can't, because you've
a bad credit history, a difficult to prove income and just no down payment
capability. And besides, regular loans are only meant for house construction
and not for renovations. So what're you to do?
Those with
bad credit understand how difficult it can be to try and get a loan for buying
a home or refinancing an existing home mortgage loan. Although, most loan
companies may tell you that if they can't help you, no one can, that is simply
not true. People with adverse credit history may need to put in a little more
effort to search out the right home loan, especially with a decent interest
rate. Every mortgage loan company varies in its offer for a home loan. A
program that is impossible for one company can be very much possible for
another. Some mortgage loan companies specialize in home loans for people with
less than perfect credit and have more lenient qualifications than others. The
key to getting approved for a loan with poor or bad credit is persistence!
Defining
home loans
Home loans
are not much different from the average loans extended by mortgage loan
companies. They've interest rates, points and fees. They can be compared
online, and they've seasonal trends. The only real difference is that, as a
borrower with a less than stellar credit record, you may have to pay a slightly
higher rate for this loan to negate the mortgage loan company's increased risk.
Some home
loans are specifically designed to help you fund essential home improvement
projects. By encouraging you to make improvements to your home, the mortgage
loan company helps increase the market value of your property. But, how does a
mortgage loan company stand to gain by extending such a loan? Simple, it makes
money through additional interest that you pay for this loan.
Thus, it is
important to prepare yourself with information about home loans and compare the
offers of various mortgage loan companies to make sure you get the best deal.
Advantages
of mortgage loan companies
There are a
few things you need to know about mortgage loan companies. These companies
specialize in providing home loans for people like you, who are in less than
ideal situations. For this, a mortgage loan company takes risks that the
average bank refuses, namely offering home loans to people with bad credit. If
you have bad credit or declared bankruptcy, a mortgage loan company takes a big
risk by extending this loan. People with bad credit are seven times more likely
to default on loans. As a result, these companies make up for this risk by
levying higher interest rates and fees and also ensure they make a profit. But
the end result is that you get the loan, which you may not have raised from
other avenues. However, the smart thing to do is to cast your net wide while short-listing
such mortgage loan companies.
Searching
the best mortgage loan companies
It's
important to remember that just because you've bad credit, doesn't mean you
should accept the first home loan offer that comes your way. Interest rates and
fees on a home loan vary from one company to the other, so it pays to shop. The
best way to compare a home loan is to go online. While comparing, remember to
enter the same information for each mortgage loan company, since different loan
amounts, down payments and income levels affect the rates. This also helps to
get a quote for the same risk level.
If you're
planning to purchase a home for the first time or refinance an existing
mortgage despite an adverse credit history, you may do well to compare the
offers of the various mortgage loan companies before you accept a home loan
offer. Certain companies specialize in offering home loans to people who have a
high-risk credit history in return for charging higher rates and fees. How much
is charged on these loans varies and offers can be quite competitive.
Therefore, it is best to compare the rates.
There are
several ways by which you can discern which home loan will suit your purpose. A
few pointers are:
Check
online: Web sites of mortgage loan companies offer a convenient way to gather home
loan quotes. Since mortgage loan companies are in competition with each other,
they offer their best quotes. In addition, they also extend facilities like
online applications and the like. So, spend some time on the net to get the best
quotes, it would be time well spent.
Compare
rates: The interest rates charged by a mortgage loan company on a home loan are
bound to be higher than any other type of home loan, where credit, income and
down payment are all optimal. And they can vary greatly. There're some mortgage
loan companies that, for the same set of qualifications, offer an interest rate
of 7 percent, which is a bit over the bar, and then there are others who may
quote 9 to 12 percent or more. Now, if this is all for the same qualifications,
you could be shelling out hundreds of extra dollars a month in payments, just
because you didn't search properly. Make sure not let the mortgage loan
companies take advantage of your situation.
Look at the
fees: When a mortgage loan company offers you a home loan, be sure to add up the
fees from each financing package and compare those with the interest rates. You
should also compare closing costs and other fees in the financing package,
which at times does add up to hundreds of dollars. Although, adverse credit is
likely to result in some fees, it should not be excessive. As a general rule,
fees should be included in the price of the home loan. You should expect to pay
up to five points for most home loans. There are always exceptions to this, but
comparison-shopping should give you an idea of what is reasonable. It is good
to remember that fees and terms can be better for borrowers during the
off-season.
Cater for
down payment: No mortgage loan company will offer a home loan to a
person with a bad credit record without a down payment. The larger the down
payment, the easier it is for you to secure a home loan. A down payment for a
home loan between 5 percent and 20 percent is usually required for people with
a credit score of less than 600. A down payment of 20 percent or more will save
you from the expense of PMI.
Read the
terms: Once you have finalized a home loan offer, make sure you know what type of
deal you are getting into. So, be clear about the terms and conditions by
reading the fine print. Some mortgage loan companies charge high fees for late
or missed payments. While late fees are common, they should not be extreme. You
can also get the documents vetted by a lawyer. The point is that you should be
comfortable with all the terms before you sign. If you've any questions, don't
hesitate to contact the mortgage loan company for clarifications.
Applying for
a home loan
The best way
to apply for a home loan is through mortgage loan company services. These services
can be accessed online. What they do is to take your application and resubmit
it to multiple mortgage loan companies. Each application is usually sent to
hundreds of such companies asking for the desired home loan. The response
varies, but at least four home loan offers are assured for each application.
These online mortgage loan company services can help people in almost every
state from Florida to California.
The
advantage of this process is that most of these mortgage loan companies won't
even pull your credit when you apply for a home loan, which is good since
multiple inquiries on your credit report can drop your credit score a bit, and
if you have bad credit to begin with, you certainly need to score as high as
possible.
Once a
mortgage loan company processes your information and finds everything in place,
it will forward the documents for your final approval and signature. The whole
process is completed in a matter of days.
0 comments:
Post a Comment