CREDIT: The Key To Easing The Mortgage Process

The vast majority of homeowners purchase their homes, with the assistance and use of some sort of mortgage. Especially, today, where home prices are at the level they are, in most areas of the country, few individuals are either ready, willing, able or capable of paying cash for a house. In addition, with the low mortgage rates available, it would be wise, for most, to borrow, in this way! When the housing crisis occurred around 2008, to a large degree, because of how mortgages had been handled, stricter requirements were implemented, and thus, CREDIT and credit – worthiness, is one of the most relevant issues, regarding acquiring a mortgage. It is often the key to the entire process.

1. Credit reports; creative; check: Before a potential homeowner begins the process of looking at potential houses, he should sit down with a qualified, recommended, trusted, mortgage professional. Have this individual check out if you qualify, and for how much! Don’t ask for a pre – qualification, but rather seek a pre – approval! Even before you visit this individual, acquire a copy of your Credit report. You are entitled to receive this once per year (free), so get it, look at it carefully, and correct any errors, etc. Use creative thinking to consider the best approach for you!

2. Reduce debt: Reduce the amount of debt you have, prior to applying. One of the metrics lending institutions use, is the ratio of debt to income, so pay off as much of your credit card debt, as possible, and avoid using these cards, until you close on your new home!

3. Earnings: Review your last two years tax returns, and see if you show sufficient earnings to qualified for the amount you will need. Again, earnings are a major component in the ratio, so perhaps you might avoid using certain tax credits, for a couple of years, prior to applying.

4. Debt ratios: There are at least two types of debt ratios, lending institutions consider and look at. One is the monthly mortgage carrying amount, to net income. The other is total debt, to income. Discuss these carefully with your mortgage professional, prior to beginning the application process!

5. Interest: What is the mortgage interest rate? Today’s low rates might mean you will be able to qualify for a higher priced home, because every percent of interest translates to a significant difference, in the costs!

6. Tax treatment: If you are currently renting your home, you know how much you pay monthly, and how comfortable that amount might be for you! When you own your home, remember that mortgage interest and taxes are tax – deductible from your income taxes, so if your area of the country has higher state income taxes, that might make owning even more attractive. For example, if you are currently paying $2,500 per month rent, and you are in the 30% federal and state income bracket, your net cost, when owning, might be about one thousand dollar more than renting, and be the same out – of – pocket, after taxes.

How is your CREDIT? Know it, and use it, to your best advantage!

Merchant Cash Advances Vs Business Loans – The Better Option

Not all the time during the year can you do great business that can give you all the cash flow that you would need to succeed and grow. There are times when you may be in dire need of funds only to keep your doors open or even expand.

As a business your best option would be to go for a Merchant Cash Advance or a Business loan. However, it is always better to understand the two thoroughly before you go out there and apply for one.

Merchant Cash Advance

A Merchant Cash Advance (MCA) is a cash advance that is given to you up-front in exchange for a certain percentage of your credit card sales volume, until the full amount has been paid for. This is best for a business such as a restaurant or a retail store that makes a lot of credit card sales on a daily basis.

Business Loan

A business loan (BL) is one that offers you up-front cash in return for monthly payments of fixed installments for certain agreed time period. The terms in this case are quite flexible and you can choose what works best for your business.

Differences between Merchant Cash Advances and Business Loans

Although both these options work well for businesses, they differ from each other when it comes to the following:

Lending Structure

While a business loan is legally considered as a loan, a MCA is not. The former is generally subject to certain limitations and need to be scrutinized by the federal authorities before it is approved. You may have to look into the qualifications that the banks or the lenders look for in order to approve such loans. You will need financial statements of at least two to three years and a good credit report to get started. Also, it might take a while for you to get your loan approved in case of a BL. The MCA however is easy to get approved without much of formalities.

The Process of Approval

The approval process is quite liberal for Merchant cash advances when compared to business loans. All you need to show is that you have a good volume of credit card sales transactions. Even a statement of six months or a year should do the trick. It doesn’t matter what your credit report looks like. The approval is almost instant and within two to three working days you should have the amount with you.

Business loans on the other hand require a whole lot of things for approval. The lenders look into your cash flow reports, credit reports, your financial statements and your industry metrics before deciding whether or not you deserve the loan. After analyzing the risk factor they determine the interest rate that they are going to charge you.

Speed of Funding

Although this might differ from lender to lender, MCAs generally get approved faster than BLs. However, you may have to do your research on this before going for one. Short list a few lenders and find out how long they take to approve your loan, provided you have all your documents in place. This should give you an idea which one would be better for your business.

The Process of Payment

As against BLs where in you have to pay a fixed amount every month (including interest) for a certain period of time, MCAs take a completely different route. The moment there is a credit card sales transaction at your POS, a certain percentage of the billed amount gets automatically credited into the lender’s account. This doesn’t affect your operating expenses in any way. Also, it doesn’t matter how much money you pay every day. It all depends on the kind of business you get. Considering the ease of payment, an MCA can definitely be a better choice.

Interest Rates

The interest rates are usually defined and published in case of business loans. The rate might even change after the initial time period. As against BLs, Merchant Cash Advance Funding would involve a higher interest rate, although not really published.

Other Costs

Business loans are quite transparent when it comes to costs. They involve no extra charges other than what is mentioned. MCAs however include a lot of other costs such as set-up fees, payment fees and processing fees that may even amount to more than the actual loan itself.

Both these loans have their own set of pros and cons. The better option totally depends on your business and your financial situation. If you think you will be able to afford to pay up a fixed amount every month, irrespective of the amount of money that you make, a BL would be ideal for you. However, if you are not comfortable paying up from your operating expenses, you should go for an MCA.

Yes, the costs and the interest rates are definitely higher in case of MCAs; but you may not feel the pinch of paying them. Also, in case of emergencies MCAs can prove very helpful as they are approved and processed quite fast. For business that do not have that good a credit report, an MCA might be the only answer.

Top Tips For Getting A Mortgage

Without any doubt, taking out a mortgage is a big financial commitment. So, you may want to get the best deal. The good news is that you can do a lot of things to improve your chances of getting a mortgage. Below are 10 tips that can help you with this.

1. Credit score matters

First of all, before you apply for a mortgage, you should get a copy of your original credit report. You can get it from Equifax or Experian. Moreover, if you have a not-so-good credit rating, you can do a few things to improve your score. For instance, you can close all the credit cards that you don’t use.

2. Calculate your budget

The next thing is to calculate your budget. You should make sure that you are going to borrow enough in order to buy the property and that you have enough money on you to meet related costs and fees.

3. Stick to Your Job

Usually, lenders give preference to employees who have been with their employers for a long time. So, if you want to leave your existing job you may want to hold on until you get your mortgage. Ideally, you should wait for at least 6 months before you apply for a mortgage.

4. Reduce Your debt

Before applying for a mortgage, make sure you don’t have a lot of outstanding loan or cash on your credit cards. So, you should pay back your debt or reduce it before applying for loan. This will also help you borrow more.

5. Proof of income

Your lender will also ask you for your proof of income. For this, you will need to get a P60 form from your employer. This from contains a summary of how much you got paid by your employer in a year and how much has been deducted in tax.

6. Bigger Deposit

If you want several mortgage choices, you may want to have a bigger deposit. Usually, lenders offer best rates to those who are willing to deposit a large sum. Aside from this, you will also be able to make lower payments each month.

7. Get a Partner

If you can’t deposit a decent sum, you may buy with someone else. As a matter of fact, this is a great way of getting a good mortgage, especially if your partner has a very good credit record. But make sure you think about it before making the final decision.

8. Consult a Mortgage broker

Mortgage brokers are there to help people like you. If you don’t want to take all the hassle, consulting a mortgage broker will be a stroke of genius. They will guide you throughout the process and you will get your mortgage. How much can I borrow? This is a common question. You can ask this question to your broker, and they will make calculations to answer your question.

So, if you follow these tips, you will have a great chance of getting a good mortgage. Hope this will help you.

All You Want To Know About Mortgage

A mortgage is a kind of agreement. This allows the lender to take away the property if the person fails to pay the cash. Generally, a house or such a costly property is given out in exchange for a loan. The home is the security which is signed for a contract. The borrower is bound to give away the mortgaged item if he fails to make the repayments of the loan. By taking your property the lender will sell it to someone and collect the cash or whatever was due to be paid.

There are several types of mortgages. Some of them are discussed here for you –
Fixed-rate mortgages- These are actually the most simple type of loan. The payments of the loan will be exactly the same for the whole term. This helps to clear the debt fast as the borrowers are made to pay more than they should. Such a loan lasts for a minimum of 15 years to a maximum of 30 years.

Adjustable rate mortgages- This type of loan is quite similar to the earlier one. The only point of difference is that the interest rates might change after a certain period of time. Thus, the monthly payment of the debtor also changes. These kinds of loans are very risky and you will not be sure that how much the rate fluctuation shall be and how the payments might change in the coming years.

Second mortgages- These kinds of mortgage allows you to add another property as a mortgage to borrow some more money. The lender of the second mortgage, in this case, gets paid if there is any money left after repaying the first lender. These kinds of loans are taken for home improvements, higher education, and other such things.

Reverse mortgages- This one is quite interesting. It provides income to the people who are generally over 62 years of age and are having enough equity in their home. The retired people sometimes make use of this kind of loan or mortgage to generate income out of it. They are paid back huge amounts of the money they have spent on the homes years back.

Thus, we hope that you are able to understand the different kinds of mortgages that this article deals with. The idea of mortgage is quite simple- one has to keep something valuable as security to the money lender in exchange for getting or building some valuable thing.

How to Achieve Loan Modification Successfully

Here are four simple steps that have been compiled by expert housing counsellors who are genuinely concerned about homeowners who are financially troubled:

Go to a counsellor

When you are not in a position to make your monthly mortgage payments, it makes sense to consult a housing counsellor. The experience and expertise of such a counsellor can help you make a counter offer to your mortgage lender that will make him consider your loan modification request.

Housing counsellors deal with such problems day in and day out. They know what needs to be done and how. Also, they have a lot of contacts that will help them achieve what they wish, in the fastest and the easiest way.

Whether your loan modification request has been denied or you have no idea about how to make this request, going to a counsellor can help you get your issue resolved, without wasting much time or money. Finding such a housing counsellor may however prove to be a challenge that you need to overcome.

An online search on a Housing counsellor should lead you to many such professionals who claim to help you with purchasing properties, renting out properties, resolving credit issues and offering proper advice on defaults and foreclosures. However, there is no way you can be sure that all these counsellors can be trusted with your details.

This is a delicate situation where you have defaulted on making your mortgage payments and you want to make your mortgage servicer agree to your loan modification request so as to prevent a foreclosure. Ideally you will need a housing counsellor who is experienced in helping out home owners get loan modifications. Do some research, get a few referrals and talk to a few people to make sure you have hired a perfect housing counsellor who can help you get out of this mess.

Go for the right type of loan workout

A loan modification can help you get a lower rate of interest, an extended payback period or even a forgiven debt, if approached in the right way. This is a great chance to save your mortgage. The different types of loan workouts include:

Forbearance: This type of workout allows you to pay partially or even skip payments during the period of your temporary hardship. You can resume full payments once you are back in a sound position and also pay an extra amount to cover your missed payments. At times your lender may even consider an extension of the forbearance agreement in case you need some more time to get back your finances.

Repayment plan: In case you have missed out on a few monthly mortgage payments, you can cover them up by entering into a repayment plan with your lender. The amount that you have missed out paying will be divided by a certain number of months. This amount will be added to you regular monthly payments. After the repayment period ends, you will resume back to paying what you would normally pay as your monthly mortgage payment.
Whatever type of loan workout you choose, make sure it is sustainable over the long haul.

Provide accurate information to your Mortgage Servicer

You are in this situation because you failed to pay up your monthly mortgage payments. So, one thing you need to stick to is honesty. Do not underestimate your income or inflate your monthly expenses while reporting to your mortgage servicer. You don’t want your mortgage servicer to lose his trust in you.

In order to be eligible to obtain a loan modification, you will have to prove that you are not able to pay up the monthly mortgage payments because of a certain financial hardship. You will also have to assure that you will be in a position to pay up the new monthly amount after a specified period of time. You will have to submit a list of documentation that will include:
• Your proof of income
• A financial statement
• The tax returns that you have filed recently
• Your bank statements
• A letter that explains your hardship clearly

Make sure you give accurate information through these documents. Also there is one thing you need to remember here. Your mortgage servicer is in no way obliged to give you a generous handout. Therefore, your expectations need to be realistic when it comes to loan modification. There is an extent up to which your counsellor can negotiate and if you try going beyond that you may end up losing that one last opportunity to avoid foreclosure.

Try getting financially literate

Yes, you may have a counsellor to represent your interests; but it doesn’t stop there. You may need some mortgage workouts in future too. A bit of financial literacy will help you take things in your own hands and handle them the way they should be handled. This does take some time and a lot of your efforts; but at the end it is all worth the trouble.

There are many lenders and counsellors who are ready to help homeowners come out of such situations. A couple of them may even contact you by getting your details from lead generation firms that sell top-quality loan modification leads and loan modification live transfers. Don’t hesitate to talk to them if they call you. Their services may be of immense help to you in resolving your issues.

At the end if nothing works out, you may even consider alternate options such as taking out a reverse mortgage, making someone else assume your mortgage, approaching a bankruptcy court, reducing your mortgage obligation and so on.

Home Mortgage Loans

Buying a home will be, for most people, the biggest financial investment of one’s life. Being that 99% of us cannot afford to buy a home outright, we will need to take out a home mortgage loan from a bank or other financial lending institution. There are many mortgage options out there and an inexperienced home buyer can feel quickly overwhelmed when looking at hundreds of thousands of dollars and decades-long commitments. This article should serve as a simplified guide to the different types of home mortgage loans in order to educate the home buyer.

Some of the various kinds of mortgages include Fixed Rate Mortgages, Adjustable Rate Mortgages, Government-Insured Loans, Conventional Mortgage Loans.

Fixed Rate Mortgages carry the exact same interest rate for the entire lifespan of the loan. This means that your monthly payment to the bank will be the exact same every month, year after year. These types of loans are often packaged as 15 year or 30-year loans. A 15-year package will naturally have higher monthly payments than a 30-year package because it must be paid off in less time.

Adjustable Rate Mortgages, or ARM’s, are loans whose interest rate is in flux according to the market. Some ARM’s remained fixed for a certain number of years and then switch to an adjustable rate, while some ARM’s carry an adjustable rate for the initial years and then remain fixed. These are Hybrid ARM’s. An example of a Hybrid would be a 5/1 ARM loan where there is a fixed rate for the first five years, after which that rate will adjust every year to the market.

A conventional loan just means that it is not backed by the government. A Government-Insured loan is a loan that is backed by the government, ensuring the lender from borrower default. There are a few different kinds of Government-Insured Loans; VA loans, FHA loans, USDA/RHS loans.

A VA loan is a loan that is offered by the U.S. Department of Veterans Affairs. A Va loan is offered to former or current military service members and their families. A great advantage of this type of loan is that a borrower can receive 100% of the loan upfront, meaning no down payment.

An FHA loan is a loan given by the Federal Housing Administration and managed by the Department of Housing and Urban Development (HUD). This type of loan allows you to pay a very low down payment, as low as 3.5% of the total loan, unfortunately, this means you have to pay more in monthly payments.

A USDA/RHS loan is a loan from the United States Department of Agriculture, this program is overseen by the Rural Housing Service (RHS). This loan is designed for borrowers with low income that live in rural areas that have trouble getting financial assistance from traditional lenders.

Tips To Choose a Mortgage Lender

No matter how rich you are emergency situations can crop up at any time. Thus, you have to consider taking a loan either from an individual or from a financing company or a bank. Most of the people of now like to opt for the latter options rather than going for the first option. This is because the financing companies or banks are more reliable than a person. But the high interests that are charged on the loans are really a burden. So, a better alternative that you can look for is mortgaging your property against the loan you take. This will relief you from being taxed with high charges and you can pay the loan amount at your convenience within the time limit that the company has offered you. To choose a proper loan lender you can follow some of the tips that we have provided in this article.

Prepare a List

While you consider risking your personal property, why plan everything in haste. Some companies would try to persuade you to take quicker decisions by offering attractive rates but let them be as they are and take your time to take your decision. Research well and make a list of the companies that you find.

Check the Terms and Conditions

Not only choosing the company but knowing the terms and conditions through which the loan to be completed are important. Remember that you are risking your property for money and the slightest carelessness in this respect can cause you to lose your money.

How Quickly They Respond

The next thing that should be your determining factor is that how quickly they respond to your queries. Emergency situations don’t give you a lifetime opportunity. A delay can make the problems to increase. So, instead, you should go for the ones that respond quickly to your needs.

Compare and Choose

After you check with several companies you can compare the interest rates and also the time period they are allowing you to make the repayments. You also have to ensure that the company that you are thinking of dealing with should have a good reputation in the market. Check their client reviews and the years the company has been in the market. If you find that the company is a genuine one then you should go ahead with finalizing the deal with the company.

We hope that just by reading this article you have got an idea about choosing the mortgage provider. This will help you in choosing a better lender for your needs.

5 Key Mortgage Differences/Factors

The vast majority of homebuyers, depend, to a variety of degrees, on securing a mortgage, for a percentage of their payment. Even in so – called cash deals, we observe, it generally means the buyer is purchasing, without any mortgage contingency, rather than meaning he is not taking out any loan. This article will attempt to briefly discuss, 5 of the key differences, in the types of mortgages, one might secure, and various considerations. There are differences in terms of type of loan, length, how much one will put down, whether there will be any points involved, and, of course, the rate paid.

1. Term/ Length: The more popular mortgage terms are 15, 20, 30, and 40 year loans. While adjustable or variable term loans, generally adjust at different intervals, the precise length, is often a determining difference, in the monthly expenditure, as well as the overall, total costs. The shorter, the term, the lower the rate, usually charged! On the contrary, longer – terms, translate to slightly higher percentage loans.

2. Fixed or adjustable: When one takes a fixed – rate mortgage, he pays the same interest rate, throughout the term of the loan. On the other hand, adjustable or variable loans, usually have a fixed rate for an introductory period, which change, based on specific indexes, at preset intervals. When interest rates have been high, variable loans are usually popular, because, often, they involve a significantly lower monthly expenditure.

3. Downpayment: We generally consider 20% down, to be the norm, when it comes to the amount, to be paid, by the homeowner, where the rest is mortgaged. However, some loans, such as for non – owner – occupied multi – family homes, or commercial properties, usually require a higher downpayment. There are also, several types of loans, where the homeowner, does not need, to put as much down!

4. Points: We often observe, some loans come with points. A point equals 1% of the amount of the loan, and must be either prepaid, or folded into the loan, adding to the amount of the principal. When one looks at the costs of a loan, you must factor – in, these additional costs and expenses.

5. Rate: Different loans come with differing percentage rates. This will determine the amount of one’s monthly payment.

Since, for most people, their home represents their single – biggest, financial asset, doesn’t it make sense, to better understand your options and costs. The more you know, the better you will be prepared, and ready!

4 Key Benefits Of Adjustable Mortgages

Since the vast majority, of those purchasing a home of their own, whether a private, condominium, or cooperative one, take advantage of some sort of mortgage loan, as part of their payment, doesn’t it make sense, they should understand their alternatives, and examine, which might best, fit their needs, and situations? In over a decade, as a Real Estate Licensed Salesperson, in the State of New York, I have witnessed, few who actually do so, rather focusing on the selling price, they pay, and the amount of their monthly commitment/ expenses. While there are multiple considerations, including lengths, points, etc, one of the major ones, is whether to seek a Fixed or Adjustable Mortgage. This article will, therefore, briefly examine and review, 4 key benefits/ reasons, for using an adjustable mortgage.

1. Qualifying: Sometimes, one may find it easier to qualify for an adjustable, rather than a fixed mortgage, because, the lower payments, are used, as part of the financial qualifying and qualification process. This may be the difference, for some, especially middle class, first – time homebuyers, between being able to, or unable to purchase one’s dream house, or home, of their own!

2. Monthly costs: If the adjustable type, creates a lower monthly payment, because of the initial lower interest rate, it may make it somewhat less stressful, to go that way! Especially, when one purchases a property, and has an excellent chance of having a substantially higher income in the future, this may be a suggested approach.

3. More house: If the introductory rate, either permits one to qualify for a higher amount of loan, or permits him to buy a more expensive house, which he desires, an adjustable mortgage, might be the preferred approach! While one should not buy or pay, more than he can somewhat comfortably afford, one’s future financial consideration and status, might suggest, this is the best course, to follow!

4. How long you’ll live there: If you plan to reside in this house, for under ten years, the lower rate, often available, with an adjustable loan, versus a fixed mortgage, may be indicated! For example, imagine, someone, aged 60 – 65, who has excellent earning power and income, and could qualify for either type, whichever offers the more attractive, lower rate, might be the best, for his life situation, and needs.

Ever since interest rates have dropped (remember when nearly every mortgage had an 8.5% rate), the vast majority of individuals, have sought and used fixed – rate borrowing. However, there are conditions, where the variable approach, might be the better alternative!

What Length Fixed Mortgage Is Best For You?

In today’s historically, low – interest environment, the vast majority of home mortgages, issued, are of the fixed – rate variety. In most instances, individuals want to lock – in these low rates, for the entire term of their loan, and therefore, opt to proceed, in that manner. Once you determine you are better served, using this type of mortgage, rather than a variable type, and you qualify, you must decide, which term, and/ or length, is best for your needs, conditions, and/ or situation. This article, therefore, will briefly discuss, which length, makes the most sense, for you.

1. 15 Years, or less: The main advantage of this term, is the interest rate, is almost – always, lower than longer – term, ones. Fewer payments over less years, combined with lower rates, translates to far lower, total payments. One’s asset accumulation grows more quickly, and payments go, far faster, towards paying – down principal, rather than simply, paying interest. However, there are also some draw – backs, or limitations, involved. One of these is they require possessing a higher income, less overall debt, and others assets, to qualify. In addition, the monthly installment payments, are obviously higher, because of the shorter – term/ period.

2. 20 – 25 Years: These are generally used, as a compromise, and/ or middle – ground, which stands between the shorter (15 years, or less), and longer – term mortgages. Although interest rates may be slightly lower than longer – period, ones, they are generally a little higher than shorter ones.

3. 30 Years: Traditionally, the 30 – year, length, is the most commonly used, type of mortgage. Although the interest rate may be a little higher, today, these rates are still, historically low. They generally provide an excellent opportunity for qualified individuals, to acquire the necessary financing, needed, to purchase a home. Especially in today’s market, where home prices have been rising for a couple of years, they often provide the best option available!

4. 40 Years: This extended term was rarely used, until recently. However, with the increasing prices of houses, extending the number of years, to repay, lowers monthly installments, even though it increases the overall payments. Since qualifying for a mortgage is based on several factors, including percentages based on that monthly installment, obviously, this term, makes it easier for some, to be able to qualify.

Deciding which term, and length, of a mortgage, is an individual decision, based on several factors, including financial, one’s comfort zone, monthly, as well as overall total costs/ expenses. Which length do you think, might best serve your needs and purposes, and why?