Real Estate
Financing:
You Can Get A Home
Mortgage With Bad Credit
by Helen
Hecker
As the real estate market continues to grow
rapidly and new technology gains ground, widely accepted beliefs
that were true a few years ago may not be true today. Don't jump
into anything blindly or sign a real estate contract or home
mortgage loan contract or any other type of contract without
giving it some serious thought. Before you commit to a real
estate purchase you'll need to find a lender for the real estate
financing of your potential home or investment property.
Your income and your debts will typically play the biggest roles
in determining what price range you should be looking at.
Fifteen-year mortgages are an ideal option if you can handle the
higher payments and if you'd like to have the loan paid off in a
shorter period of time. Thirty-year fixed-rate mortgages offer
consistent monthly payments for all of the 30 years that you
have the mortgage. And if the market is good, you can benefit
considerably from locking in a lower rate for the full term of
the loan.
Most adjustable rate mortgage programs offer what is called
"rate cap" protection, which limits the amount the rate can be
increased each year and over the life of the loan and all
adjustable rate mortgages are amortized over 30 years. Make sure
to get an estimate of your real estate financing closing costs
from the lender you've chosen. By law, the lender is required to
give you a statement within three days of receiving your loan
application. Any of the loan programs for down payments of 20%
or less require you to purchase Private Mortgage Insurance (PMI).
A mortgage application can be resubmitted many times; it's not
uncommon for this to happen. Interest rates can go up if a
picture is painted of a rosy economy and that it is flourishing,
like more jobs being available. This can lead to inflation which
will make the rates go up. Any money that you receive from a
lending institution will show up on your credit report and the
payments will factor into your debt-to-income ratio.
A reported FICO credit score is not a requirement for most
conventional or government loans like FHA loans or VA loans.
Potential borrowers can submit information about income, assets
and equity to determine just how much a down payment should be.
This is usually processed through an automated underwriting
system. Twenty-year fixed-rate mortgages allow you to make a
consistently higher monthly payment throughout all 20 years you
have the mortgage. The shorter term means you pay off the loan
off quicker and pay less interest and build equity faster than
with a 30 year loan.
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Check
with you CPA pr other tax advisor for the most current
tax information; your property taxes may be deductible.
If you're working with a home builder within a
sub-division or housing development and just making
carpeting, lighting and appliance selections for a brand
new home, you'll probably be able to get a standard
mortgage loan. If you're hiring contractors,
electricians, plumbers, and painters, you'll probably
need a construction loan, which provides funds to pay
the subcontractors as the work goes along. If you plan
to borrow money from other sources, some lenders may
impose limits on how much of your down payment can come
from other sources.
When financing real estate with a conventional loan it's
important to know that a low FICO credit score does not
mean you won't qualify for a home loan or home mortgage.
The FICO credit score is just one of many factors that
are considered in loan or mortgage applications.
Although the FICO score is taken into account there are
no minimum scores required. |
Ask other homeowners
for advice about what real estate and mortgage pitfalls to look
out for. Work with a reputable mortgage broker or lender to
create a customized loan program with the best combination for
you of rates, points, and closing costs to meet your needs.
Before you finish with any real estate financing make sure you
read every real estate contract and loan or home mortgage
contract carefully before you sign on the dotted line. Each and
every line is important - look for anything that's vague or not
clear and don't be afraid to question what you don't understand.
About the Author
For
information on bad credit real estate financing and finding the
best home loan or home mortgage go to http://www.Real-Estate-Financing-Tips.com
a real estate broker's website with real estate financing tips,
trade secrets, help, quotes and resources including refinancing
and creative financing.
