Top Ten Steps to an Affordable Mortgage for Single Moms

Ten Steps to an Affordable Mortgage for Single Moms- 150x150The Federal Housing Authority (FHA) offers numerous opportunities that are advantageous for single moms. Statistics indicate that slightly less than 35% of the total number of homes in the US are occupied by single parents. Only 40% of those belong to single moms with very low income levels. A single parent caries the burden of many expenses to keep up with the high cost of living in this country, so having access to an affordable mortgage is imperative.

Benefits of Seeking a Mortgage as a Single Mom

  • Low monthly repayments. Unlike couples, a single mom has sole responsibility for finances. Being a single mom, you have options to obtain an affordable mortgage loan. Some programs can help you budget for mortgage repayments by taking out a portion or all of the payment directly from your paycheck.
  • Access to a variety of mortgage programs. There are many governmental and nongovernmental organizations that provide housing help to single moms. They build quality houses for single moms that come with affordable monthly mortgage payments, which gives easier access to gaining full equity on the home.
  • Access to bad credit mortgages. While couples can add up both incomes in order to qualify for a mortgage, a single mom has just her own to rely on. Many mortgagors have made it easier for single moms to qualify for mortgages by allowing mortgages for bad credit. This means that even with a low credit score, a single mom can still qualify for a mortgage.
  • Flexible refinancing solutions. Many mortgage loans for single moms have a refinancing option attached to them. This feature is meant to keep the single mom up to date with any changes taking place in their loan. Their credit rating actually improves over time through this plan. Such refinancing solutions protect against repayment default.

Steps to an Affordable Mortgage

  1. Check your credit score. Before you embark on the finer details of obtaining a mortgage, look at your credit report. Having a score above 700 is ideal- even having a score of 698 will raise your interest rate by a third of one percent, translating to a significant amount of extra money spent in the long run. The higher the credit score, the lower the interest rate, which means easier access to a mortgage.
  2. Weigh the advantages and disadvantages. As noted before, single moms have many expenses, including food, medical, and transportation. Before deciding to move ahead with the mortgage loan process, you should look at the pros and cons carefully. Analyze your budget and other monthly payments to see if you can manage a house payment.
  3. Check the qualification requirements. This is a rigorous process. You need to visit a number of lenders and find out their individual loan requirements. Check current mortgage rates, processing times and the amount of funding that you can qualify for. Some options for single moms include HUD loans, FHA loans, subprime loans, seller financing and rent-to-own. After doing this, you will know which lender will give the most funding paired with the lowest possible interest rate and down payment.
  4. Seek financial advice. If you are not financially savvy, you should consider seeking the advice of a financial adviser. They will provide you with information on the different types of mortgage loans, helpful programs, and other requirements that match your current needs with your financial situation. The financial adviser can easily predict how much you are likely to qualify for given your income, expenses, and credit score.
  5. Prepare all required documents. Among the documents that your lender will require includes your driver’s license, a utility bill and your social security number in order to authenticate your application. The lender will also require documents indicating your income, IRS tax returns, a recent bank statement and a letter from your current employer.
  6. Apply for the mortgage. A mortgage takes about 1 to 3 months to process. However, the processing period could be shortened if you provide all of the required documents in a timely manner. In other cases, you may qualify for a lower amount than the estimate you had from the financial adviser. If you find out these details in advance, then you will have more time to seek a subsidy or other mortgage program for single moms.
  7. Hunt for the right house. As the lender continues to process the loan, start hunting for the right house that fits your tentative budget determined during the loan pre-qualification stage. Among the factors you should consider when choosing a home is the cost of insurance, the location, price, taxes, maintenance and repairs.
  8. Close the deal. As simple as it sounds, this is a very tricky stage in mortgage processing. The closing costs include the agent’s fees, appraisal fees, processing fee and the lawyers. Add up all of these costs and find out whether or not you can manage to make the down payment. While the interest rate may be low, these costs can be high. You should calculate and select the option with the lowest total cost.
  9. Make the down payment. If the lender gives you the go ahead, you should make the down payment within the stipulated time period. In most cases, the down payment is 3.5% (excluding the closing costs). You should also have extra money set aside to take care of additional costs such as transportation, mortgage loan documentation and moving costs.
  10. Move in to your house. Once the mortgage has been approved and the down payment has been made, the lender will grant access to your home. Take care of your investment so that your home maintains or even increases in value. As you make monthly payments over the years, your home equity will keep rising.

Mortgage lenders may reject some applications for various reasons, from having too low of income to having too low of a credit score. If you were denied, there are still options, so check alternatives offered by HUD and the FHA.

Top 10 Steps for Getting a Post-Bankruptcy Loan

bankruptcy- 150x150With the current weakening dollar and bad financial climate, many are losing their jobs and business owners are closing at the same time. And if you’ve lost everything and filed for bankruptcy, then you have to wait at least two years to get a loan. However, you get to qualify for 100% of the financing advanced once this waiting period is over and you’ve met the conditions set by the credit bureau.

Coming back from bankruptcy can be tough. Dealing with your low credit score when in financial talks with lenders and even car dealers can be difficult. The important thing is to get back on track and start moving forward. You have new credit history to build!

The Effects of Bankruptcy on a Victim

A bankruptcy is often a desperate measure taken to avert a desperate situation. Some of the negative effects of a bankruptcy include:

  • Low credit score. Bankruptcy is the leading action that kills one’s credit score for about 7 to 10 years down the line. However, this effect diminishes as this period nears the close.
  • Difficulty in qualifying for loans. Lenders are very sensitive to credit reports in an attempt to avert the risk of defaults. As such, it becomes very difficult for a bankrupt individual to qualify for a loan a few months after declaration of the bankruptcy. You can only qualify for low-amount and high-interest loans if you are lucky.
  • Difficulty in securing a job. Since many employers require you to furnish them with a credit report before being hired, bankruptcy makes it very difficult for one to land a job. Employers consider someone with a good credit rating as one who will not put the company in financial trouble.

On the other hand, bankruptcy offers some advantages:

  • A new financial regime. If you are successful in filing for a bankruptcy then you have the opportunity to start all over again as if nothing has happened before. This is a golden opportunity to rebuild financially; having learned from the past mistakes.
  • Higher credit rating. Your credit score can go below 400 immediately after a successful bankruptcy. However, as you now take a new turn of events with the previous mistakes in mind, you will likely have a higher credit rating than you had before the bankruptcy.
  • Cessation of creditor pleas. Once you file for bankruptcy, you start breathing again because the court stops all your creditors from calling you all the time, sending emails, threatening you, foreclosures and so on and so forth.

Getting A Post-Bankruptcy Loan

  1. Be patient for at least 2 years. Most mortgagors will not look at your application until at least 2 years after the bankruptcy. A few others have capped this waiting time at 3 years. This waiting period is a learning period during which you can make several decisions. For instance, you can circumvent this waiting period in case you are willing and able to remit the down payment straightaway or settle for a loan at a higher interest rate.
  2. Review your credit report. After a bankruptcy, you are desperate for a higher score which can help you to secure a mortgage or any other loan. Make an effort to improve your credit score by obtaining a free report from Equifax, Experian and TransUnion free of charge by visiting annualcreditreport.com and checking for any errors in the credit report. File complaints with the relevant credit agency to have your credit score corrected.
  3. Understand and adhere to bankruptcy conditions. As you plan to apply for a mortgage loan, understand the consequences of the bankruptcy. If you had filed for a Chapter 7 bankruptcy that wipes out all unsecured debts, then it affects your credit history for the next 10 years. On the other hand, a Chapter 13 bankruptcy that prevents a foreclosure will affect your credit history for the next 7 years. However, your credit score will continue to rise as you apply for more credit and make payments on time.
  4. Consider available alternatives. Usually, there are two options to select from. The first one is the traditional lender while the other is an online lender. A traditional lender requires your physical documents in order to make various comparisons—a time consuming process. If you need the loan approved rather quickly then an online lender would be a better option.
  5. Clean up the damage on your credit report meanwhile. What impresses a lender most is the effort that you are making to improve your current credit score. Making prompt payments of your bills and establishing a visible track record of income will help to improve your current credit score. This will not only increase the chances of qualifying for a loan but also qualifying for more money at lower interest rates.
  6. Pay all your current bills in good time. Since your credit score is badly damaged, you must clear all your bills and make any due payments in good time in an attempt to improve your payment history. If you have a credit card, use only a small percentage of the credit limit which you are sure you will manage to pay back when due. Borrowing and paying on time improves your credit score rather than having no activity on your credit cards at all.
  7. Amount of loan and interest rates may not be favorable. Bankruptcy jeopardizes the way lenders view your ability to repay. As you hunt for a mortgage loan, beware that you will qualify for relatively lower amounts at higher than average interest rates because you are considered high credit risk. However, the terms get better as the lender monitors how well you pay your bills post-bankruptcy.
  8. Hire the services of a mortgage broker. After bankruptcy, managing your personal financial services is usually very difficult. You can count on a mortgage broker during this time to help you through the process of searching for a new mortgagor. They will do all the paperwork for you and present the most suitable loan that meets all your requirements.
  9. Secure all the money for your down payment. The more you give as down payment, the lighter the burden you have in principal repayment and interest rate charged. It also shows the lender that you can manage your finances properly once again and secure income, so you will qualify for more credit. In most cases, you may not be able to raise the down payment money through your own efforts. That’s where assistance programs like grants, 401k, Neighborhood or Nehemiah comes in.
  10. Consider these three critical factors. First, the waiting period for a successful mortgage application after bankruptcy is 2 years. Note that this period is variable from one lender to another and the longer you wait, the higher your chances of qualifying for a loan with more favorable terms. Secondly, an application following bankruptcy must be detailed with your current pay slips, bankruptcy discharge papers, 2-year tax returns, and a summary of all your liquid assets, bank details and written explanations. Finally, if you don’t want your finances to be disclosed then you may opt to use the low-doc or no-doc mortgage approach.

The truth is that qualifying for a loan after bankruptcy is a pain in the neck. However, your efforts in improving your credit rating, persistence in rebuilding and patience as you pursue various options will pay off and get you back on track.

Top 10 Mortgage Tips For 2013

tips-150x150You may be wondering why so many Americans are getting mortgages right now. 2013 has already started off with low interest rates so people have been anxious to secure these rates while they last. A deeper look at why you might look into getting a mortgage is that those who live in their own houses tend to have lower anxiety and expenses overall. Houses allow for individuals and families to settle down in a more permanent environment and focus on other aspects of their lives. Here are a few other benefits to consider:

Benefits Of A Mortgage Loan

  • Home Ownership. A mortgage loan enables you to have ownership to your own house without having to pay the full price instantly. A down payment is required for you to have your own home, but it is only a small fraction of the whole price premium.
  • Access to Cash. With a mortgage, you can tap into equity to access cash as needed. With this option at your fingertips, you will be able to use this money towards a car, making home repairs and even funding your child’s college education.
  • Improves Credit Score. If you handle your mortgage perfectly according to the terms and conditions of the mortgage lender, then your credit score will rise tremendously. A high credit score will enable you to access more credit products at lower interest rates.
  • Tax Benefits. If you have a mortgage loan, then you qualify for certain tax deductions in accordance to the rules and regulations of your State, which reduce your tax liability significantly. These deductions range from homeowners insurance to private mortgage insurance.
  • Capital Gains. If you maintain ownership of your home, then its value will increase over time; allowing you access to more products using the value of your home. If at some point you want to sublet your home and your mortgage lender allows you to, because you will have access to extra income.

Tips You Must Know

If you’ve been contemplating whether to take out a mortgage loan or not, then this is the time to end the dilemma. 2013 has come with new lending standards which you need to acquaint yourself with before making a decision. It doesn’t matter whether you are taking a mortgage loan for the first time or refinancing- 2013 is a great year for mortgages!

  1. New Rules. The Consumer Financial Protection Bureau (CFPB) released new rules beginning January 2013 which will ensure that lenders only advance loans to borrowers who have the ability to repay. The mortgages advanced from this year must comply with all the basic requirements that are designed to protect consumers. Once these are met, then the lenders will issue you (the lender) with a qualified mortgage.
  2. Mortgage Rates Have Decreased. Compared to last year, interest rates on mortgages have significantly reduced by about 25% from Freddie Mac’s average of 3.87%. This presents a great opportunity for you to lock your interest rate by taking a loan in 2013.
  3. 10-Year Mortgages. You are used to the normal 30-year mortgages which sometimes deny you financial peace in your latter years. You can take advantage of the lower interest rates so that you have a shorter mortgage repayment term because the lower interest rates will offset the lower monthly balance. This can enable you to repay your mortgage loan over a very short period of time of about 10 years. If you had already taken a long-term mortgage then you can refinance it now and complete making payments earlier.
  4. Conventional Loans vs. FHA. The line for FHA mortgage applicants is always long because they allow you to take a loan for a down payment as low as 3.5% of the value of the home. However, they charge higher fees in comparison to conventional loaners. With conventional loans requiring a down payment of 5%, the overall cost of the loan is generally lower. You can use a mortgage calculator to compare the costs before making a decision.
  5. Credit Rating. This is a golden requirement for receiving a good rate. The credit standards released by CFPB require that you must have a faultless credit history for at least one year before applying for a mortgage. In order to get the most attractive interest rate on your mortgage, you require a credit score of 720. However, you will still get your loan approved with a credit score of 680, but if it’s below this, then you will have to negotiate with your lender.
  6. Lock-Rate Rules. If you’ve submitted an application for a mortgage loan at a locked interest rate, it is not yet over. If there are any documents you still need to submit to the lender then do it immediately (within 24 hours). Delays can happen in this process which may make you lose your locked-in rate. Ensuring paperwork is submitted quickly to your lender and keeping in contact at least weekly will hopefully avoid any problems. The lender’s time is valuable and you need to safeguard it so that you receive a good deal.
  7. Opening New Accounts. If you want to apply for a mortgage this year, then be careful not to open new credit accounts which will have an impact on your credit. Most lenders will ask you for a second credit report shortly before closing the deal to confirm your credit habits. Since such acts could lower your credit score, your mortgage loan deal may be rejected in the last minute when you’ve made other plans with it.
  8. Shop from Several Lenders. Even though the lending rates may look attractive, you should still look further to all lenders so that you land a mortgage deal with the lender who offers the lowest interest rate. There are new programs in the market which will help borrowers to manage payments according to the FHA mortgage rules.
  9. Good Communication with Your Mortgage Lender. In case you have a hard time making payments with your current mortgagor, you may want to look into the new 2013 FHA programs like forbearance. These programs will enable lenders to easily work out any delinquent loans with loan modifications or short sales if the borrower’s financial status has changed unfavorably. Communicating with your lender regularly is the only sure way to have peace and safeguard your credit report.
  10. Underwater Refinancing. Perhaps you feel frustrated because you’ve been trying to repay your home but your home now has a greater value than what you owe the lender. Well, 2013 is the year that you can escape with a refinancing deal. Regardless of how underwater you are, the Home Affordable Refinance Program (HARP) has been revamped to enable you to refinance your mortgage.

No matter your financial situation, 2013 is a good year for mortgages if you have a decent credit report. This will enable you to borrow more money at lower interest rates. A house is out there for you and this is the year for you to get it!

How to Get a Great First Mortgage

mortgageIt is part of the American dream to own your own home. Most people feel a huge accomplishment in buying a home of their own. There are several advantages to buying a new home vs. renting a home. The first being Equity. Equity is established every month with your monthly mortgage payment. Instead of just paying rent you are putting equity in your home and investing in your future. Secondly, there is a tax benefit to owning a home. When owning your own home your mortgage interest and property taxes are tax deductible. Your accountant will help you with details and advise. Last, you are building credit. Make all mortgage payments on time and this will improve your credit history.

Mortgage companies have special programs made especially for the first time home buyer. Some are private programs and some companies even have government programs. If you can put very little money down on your home an FHA loan is probably the right program for you. It allows for gifts and grants as down payment or for closing cost. The mortgage rates are good and fees are low. If you can get approved for an FHA loan they are usually the best suited for first time homeowners. The rate is low and there are many restrictions on banks and mortgage companies so they cannot charge you too much in fees.

Buying a new home can be a stressful time for most, but if you do your research and make sure you have all your documents needed to get a mortgage and it should make it a lot easier on you. Your mortgage company will pull a credit report on you. You will have to provide income documentation, assets, information on the home your buying, insurance company information etc…

When you have decided to buy a home there are a few things you need to do:

Make sure your credit is good:

  • Do not open any new credit cards or buy any large items prior to buying your home
  • Pay all credit cards and bills on time

Make sure you know what you can afford:

  • Look at your DTI. This is your debt to income ratio
  • Mortgage companies rely a lot on this ratio

Make sure you have the money:

  • Assets are also a huge part of receiving a mortgage loan
  • You need to have at least 5% to put down unless you can qualify for an FHA loan which will only require 3%
  • You will also need money for closing cost and most loans are going to require a certain amount of money in reserve (most require 3 months)

Purchasing a home is one of the most satisfying things you will do in life, so be sure to take it serious and listen to your mortgage adviser. Happy Hunting!