Owning your own home is a significant symbol of your independence and success in life. If you find yourself planning to buy your own home, this page will provide you with home loan FAQs. Achieve your dream by choosing the best type of loan and get advice on how to circumvent bad credit or rejected loan applications.
Will I Be Able to Buy Any House I Wish with a Home Loan?
That depends on two things: what type of house you want and how much money a mortgage company is willing to lend you. In general, the bigger the house, the more money and income you will need. Secondly, the maximum amount of money a mortgage company will lend you depends largely on your credit rating.
Credit Rating? What Credit Rating?
Your credit rating or score is found in your credit report. A credit report is a document filed by a credit bureau that provides details about your credit and payment history. A good credit score can actually help you qualify for a loan. Therefore, the higher your credit score, the better.
What If I Have Bad Credit?
Don’t despair if you have bad credit; there’s still hope for your home loan. But first, you need to fix your bad credit. You can fix your bad credit alone or with the help of a credit repair company. It’s up to you which one you think is right for your needs.
What Type of Home Loan Should I Get ? Fixed or Variable Rate?
You should only get a fixed rate home loan if the interest rate you and the mortgage company have agreed upon is fair and something you can easily afford even during times when money is tight. A variable rate mortgage is better if you wish to enjoy lower rates for the time being, but it is important to remember that you will be charged higher rates once the initial repayment period has passed, so you will need to have more money on hand once this happens.
By: Kent Pinkerton
Posts Tagged ‘Loan Applications’
Refinance Home Loans and the Home Value Question
November 25th, 2009Lower refinance home loan rates are raising the volume of applications but, will a potential refinance boom be offset by uncertain home values? Estimates for the fallout of refinance loan applications range from 50% to 65%, due in part from low appraised home values.
Borrowers with substantial home equity and good credit may be the primary beneficiaries of low refinance rates, while many others could find themselves stuck in their current home loan, unable to refinance because of lower than expected home values.
High expectations of home values can be reduced by the reality of appraisals, which determine market value by comparing similar properties recently sold and closed escrow. When a lender takes a refinance home loan application, the borrower provides an estimate of their home value, which may be just wishful thinking, considering market conditions.
If any of the recent home sales within a neighborhood are from foreclosures or short sales where the banks have substantially cut the prices for a quicker sale, appraisers have no choice but to use those properties as comparable sales to determine the value of a home for a refinance loan.
The mortgage industry is taking steps to ensure more reliable home valuations. Fannie Mae and Freddie Mac, the largest U.S. mortgage finance companies, have agreed to establish a home appraisal code to help prevent undue influence on appraisers, which has in the past led to artificially high home values, contributing to a record number of foreclosures.
Also, in order to protect against potential loss, FHA has changed their lending guidelines to require that borrowers pay for two separate appraisals on cash out refinance home loans over 85% loan to value, using the lesser of the two values to calculate the maximum loan amount.
Because home values are such an important issue when refinancing, lenders should offer to have the local comps checked, as a courtesy to borrowers prior to spending any appraisal money, since the borrower usually pays for the appraisal, just to make sure the value is close to what is needed in order to fund a refinance home loan.
By: Rick Smith
