Only 6 Out of 10 Qualifies for a Mortgage: Find out Why

Have you ever heard how low the rates have been and you are encouraged to apply for a mortgage but then you don’t qualify? This is unavoidable for some. A reality going on is that only 6 out of 10 that apply for loan are qualified. 4 out of 10 cannot qualify for different reasons, reasons that they didn’t even know would lead to their application’s disapproval.

There are 3 major aspects that are reviewed during an application. And within those 4 major factors lie the reasons for disapproval.

Here are the factors and the reason why one is rejected:

Credit

So, what is credit? It is basically the agreement we make whenever we borrow of some value and agreed to pay on a later date. But then, for mortgage, this is a very important factor. Most lender pull out your credit report and review it if you could actually qualify for a mortgage. So the reasons why one’s application is rejected as the credit is reviewed are:

• Your credit score is too low

What is a credit score that is too low? Too low credit score is a credit score under 620. The typical score most lenders accept is 640, some may go until 620 but only few lenders agree to that score. Way under that is not acceptable. So, if you are thinking of applying, improve your credit score first.

• Reached the Maximum Credit Limit

This means your balance has actually reached more than 30% of the allowable amount. The best thing to do about this is to increase the balance by paying something off.

• Numerous Credit Inquiries

This could actually lower down your credit score in some way, so during your application it would be good to keep from pulling out your credit history. A mortgage related check for your credit history isn’t going to affect your score, aside from that, the effect is very visible.

Debt

Debt is the amount that is owed to a person, a company or organization. So how debt affects the application? This actually reflects you’re over all capacity to pay your debts. Here are the reasons for rejection concerning your debts:

• Paid-in-full debt that is not accounted

There are debts that you must have paid fully; however, there are times that your credit doesn’t support such. So no matter if you already have zeroed it, it will still be accounted. So, if ever you have zeroed a huge debt in advance and your credit won’t support such, chances are, you can get rejected as the debt is still accounted for.

• Failed Co-signer Obligations

Have you lent your score to someone? This could actually be a problem in your application, if ever the person isn’t paying his mortgage anymore; your score would definitely suffer.

Income

• Not Enough Income

Are you self employed and your schedule C is showing insufficient income to qualify you? This is also one of the major problems most self-employed encounters. The best way to get through this is to limit the expenses you declare to increase your income. Mostly, self employed maximize their expenses as they declare on their tax to minimize the tax they would be paying.

You can actually have a professional help you with all these before you could apply. To avoid further hassles and delays, it is good to put everything in order before your application.

Brian Moynihan Working His Magic for Bank of America’s come back in The Mortgage Scene

Brian Thomas Moynihan, Bank of America’s CEO has faced another trial in his abilities as a cross cutter and problem fixer and yet managed to prove his undeniable skills. On Thursday, the bank has stated an increasing volume on mortgage lending and a decrease in the expenses. This is an intermediate sign that the bank has indeed moved past the effects of purchasing Countrywide Financial.

The results for the fourth quarter earnings of the bank have highlighted the extreme scale of the problems that remains. There was a deflation in the total profit of the bank that goes about 25 percent due to a decreasing number of client banking and other charges that the bank settled. What the bank have discovered is the way to get out of the quick sand of troublesome home loans. What it needs to discover is how to grow after all.

The challenge now is how to boost the profit, which would be quite hard as lending margins are still very narrow with capitalization issues that might hinder high profit gains in most banks.

It was said that Moynihan have a minimal experience only when it comes to increasing gains. He may have made his way to be known as a problem solver in the past as he fixed few branches of Bank of America, however, this is considered as a very different challenge with a higher difficulty rate.

Moynihan is exerting effort to slowly resolve this issue as he laid out plans together with Financial Officer Bruce Thompson aiming to gain new business which includes their plans to hire mortgage loan officers.

Profit may have deflated in the fourth quarter for consumer banking but the bank has managed to get an increase in the global banking and other fields.

Moynihan have expressed its drive to keep on with his strategies and strengthen the company’s earnings. He still has time and the investors support beside him.

It was also revealed by one of the executives working with Moynihan that his plans focuses on cleaning up the mess from the past, cutting the expenses while patching up lost capital.

Now, they are surely back in their feet and would be able to continue reclaiming their lost glory as the number one mortgage lender in the entire nation

Mortgage Rates – Affordable and Within a Family’s Budget

A lot of lending companies have been gaining more profit despite the housing industry crisis. The reason for this is because they were able to cater the needs of borrowers who are heavily affected by the economic crisis. Getting a mortgage nowadays is easier compared to previous years because of the advent of computers and the internet. Getting a mortgage is very important for families who need to purchase their own house.

A young professional who is established and has a steady job should consider buying his own house. Lowest mortgage rates are available today and the reason for this is because of government intervention. A property such as house, land, or apartment cannot be financed by mere savings so there is a need to get help from mortgage lenders. One-time payment of the property’s entire price is very burdensome but this can be converted to monthly installments with the help of the mortgage companies. A mortgage loan can work in favor of the borrower especially if he works closely with a real estate agent or a financial adviser. Savings can be realized and expenses can be avoided with the help of professionals who are experts in the mortgage process.

Purchase of a property, renovation and repair of an existing house, and property investment is now much easier because of mortgage companies. These companies have schemes and products that fit the needs of their borrowers. The type and terms of the loan to be given to the borrower depend on his eligibility and financial standing. A careful evaluation of his credit rating and financial capabilities is used as the basis for granting loans. The borrower has a lot of choice and he should be wise and careful when selecting which mortgage companies can give him the most benefit.

House renovation can also be financed by a mortgage loan. The home owner just needs to comply with the requirements and abide by the process set by mortgage companies. Managing and gathering of funds for renovating a house is difficult and confusing but this can be avoided by getting a loan from mortgage companies.

The lowest mortgage rates are one of the most important considerations when getting a loan. A lower interest rate would result to lower monthly loan installment. Getting the best rate can be done by following simple tips and advice from friends and financial experts. Reading the terms and conditions of the loan is usually recommended by peers to avoid incurring unnecessary fees and expenses.

Making the Most of Mortgage Services

People who wish to purchase a home for their own, need to be aware of services that can be received in a mortgage arrangement. These services often come with the property which is meant to be conveyed in favor of a lender in a mortgage loan arrangement.

Mortgage services are therefore offered to a borrower who has availed of a mortgage, a home equity loan, a second mortgage and a mortgage refinancing arrangement. As we all know, a lot of people prefer to purchase a home by sourcing funds from lending companies. Most people find it difficult to buy a home with their own funds or savings because of its rising cost. With a mortgage, a borrower can get a home without paying for its entire amount. A mortgage can make payments easy for the borrower because he gets to pay the house in installments.

Once a borrower avails of the loan, the first mortgage services that will be given to him is the appraisal of property being used as a mortgage. This is necessary so that the lender can get a fair estimate and proper valuation of the home being purchased. Also, the mortgage services help ensure that the documents which will be used for the loan are in the name of the borrower.

It can be observed that some people who have funds which can be used to purchase a home still avail of services of lending companies. People do this because the strict and rigid mortgage process can help verify the authenticity and validity of homes being purchased.

Mortgage services are very helpful to the borrower because it can provide the most updated information about the changes in the lending market. New policies, regulations, changes in lending rates, technological advancements and other economic factors, can be very confusing for the borrower but with the help of this information, he can stay tuned in to what is happening in the market.

The competition among mortgage companies is very tough. These companies tend to outdo each other and may offer vague and false promises to prospective borrowers. In order to be not overwhelmed by all these competing companies, it is a good idea to avail of the services of a reliable mortgage broker. The mortgage broker can help a borrower choose which companies can offer the best loan package and best mortgage services. A mortgage broker can help a borrower make the most of mortgage services.

Mortgage Rates at its Best

The banking and non banking funding institutions are experiencing short run and long run changes in the rates of interests. The customers are getting angry in these fluctuations as it may affect them in most cases negatively. The rising needs of the housing finance have made people commit for the long term mortgage loans that have a stipulated constant rate. The market financier’s availability makes a very decisive role in the fixing of rates without considering the economic issues of inflation and deflation.

The financing market will always be unstable somewhere in the middle and this is when most of the people will be finding the best solution in the lowering of their monetary burdens. The relationship of the market reveals more demand for the mortgage loans that causes the reduction in the mortgage rates and the opposite also applies. In the general analyzing of the situation in a lower rate, the new customers are running for the availing of the loans. But for the banks to refinance the interest burdens, customers approach the banks in the mortgage loaning.

With no attempt from the bank side, customers themselves rationally thinks and discovers that it is good to avail a new reduced interest loan through conversion of the present higher interest bearing loan in to the former collaterally. It is a matter of making replacements in loan and availing the lowest interest rates that saves on valuable monthly income. In the availing of the refinancing, one will have to be keen in the settlements that are imposed and the processing charges by the bank in the making of a very friendly working decision.

It is very difficult in the finding of the best deal whether in the finance scheme or mortgage loans that are fresh. This is because one has to understand best the terms and conditions by the financiers. Each bank has its different rates. These rates are falling to a level that is encouraging in the industry of housing. Apart from that, the fixation of the down payment and other formalities of the bank reveal the extent of flexibility provided by the lender when availing the same.

Of late, the mortgage bankers association reveals the extensive growth in the mortgage demand of loans by the encouraging low rates produced by the positive variations in the times of economy. The affected depression by the real estate industries shows a rental trend in the people than buying of the property. But the current developments of the economy and increasing job market bring back the hope.

What is Mortgage Insurance?

Ever tried going bungee jumping? This is a risky sport wherein the individual will take his toll and jump over a thousand feet of high area. This is a self-fulfilling and death defying adventure that most individuals are hesitant to try. Others have joined in the fun and some are still no-no to extent of this adventure.

Relating with bungee jumping is the mortgage phenomenon. This is risky and this is self-fulfilling as well since one has to take out a loan for the benefit of owning a home. But if a borrower is like those bungee jumpers who are in for the drive but not for the risk, then having a safety net is the best alternative that one can use. It is a brilliant idea to protect one’s mortgage once he or she becomes incapable of paying the amortization.

What is mortgage insurance? This is a safety net from unexpected situations like incapability to pay the required monthly payment due to hospitalization from misfortune or illnesses and unemployment.

There are varieties of mortgage insurance. The first one is insurance for one’s monthly amortization due to being lay off or hospitalized. The insurance company will provide with the required loan schedule for a year or two—enough period for the insured to get over the misfortune. The second one is the income protection—the company will provide the insured a certain portion of his or her income for a time until reinstated from work or until retirement. This is the most appropriate type if one wants to be insured and covered against unemployment since the portion of the income cannot only be used for paying the loan but also for other finances.

Mortgage premiums will be computed based on these elements: age, cost of monthly loan payment, insurance features and type of employment. Premiums can increase depending on the amount of insurance policy and the a fore-stated considerations. One can also choose if he or she wanted to be covered partially or fully. This can also affect the monthly premium that the insured should pay for the company. Carefully assess the premium so that one can make sure that the insurance policy is valuable, good and reasonably priced.

Other things to consider in mortgage insurance are the exclusion and the waiting period. There are some instances when the policy will not cover the insured, right after the buying of the policy. The insured should be aware of this exclusion period that is included in the contract policy. This is safety net as well of companies against those individuals who may know they will be laid off their work so they took out a policy. Waiting period should also be determined so that the insured can know when he or she is legal to file his or her claim. Longer waiting period dictates lesser price for the policy.

What is mortgage insurance and what are the things that an insured should remember are the most important things to remember before taking out this policy. Consider these things before diving in the risk of financing a mortgage.

Mortgage Services and Mortgage Service Providers

Have any idea what will happen to one’s housing loan after signing the loan contract? Many borrowers are misled to the idea that all institutions from which the loan originated will be the one servicing the loan.

But, this is not entirely true because most companies’ mortgage services are bundled and sold to higher financial institutions or mortgage service providers, days after their housing loan is closed.

Increase in the rate of this financial practice is observed and a stature entitled National Affordable Housing Act specifically addressing and regulating this practice has already been passed and is currently being implemented. This enactment provided guidelines to mortgage service providers that provides for various rules and regulations to follow on the course of the loan servicing.Indeed, it should be understood by borrowers since they are the main stake holders of their loan and for them to file necessary inquiries and complaints if unnecessary disputes took place.

As provided and maintained by the country, mortgage services are as follows: setting up a monthly amortization schedule, collecting monthly payments and handling borrower’s escrow accounts, and making yearly report detailing the escrow account, account balances and tax payments insurance pay-out. These are the mortgage services that should be observed meticulously by these service providers.

Aside from these main services, those providers should also comply with the terms and agreements provided by the National Affordable Housing Act. These provisions are as follows: providing the details of the loans, informing the borrower that his or her loan will be sold to mortgage service providers and responding to written and formal complaints if any

These are some of the necessary information a borrower should know after he or she closed a loan contract. This is essential because once mortgage services were not appropriately delivered and a mortgage service provider despite various written inquiries about the undelivered service failed to comply with such demand, the borrower can do various serious actions against the provider. One of which is to file a direct complaint through the nearest local or state office of consumer protection. The borrower can also opt to go to the Department of Housing and Urban Development (HUD) if the requests are continuously ignored. The borrower can file a complaint there under the National Affordable Housing Act or the HUD’s Office of Single Family Housing. Aside from that, the borrower can also have her complaint directed to the Correspondence Branch of the Federal State Commission. And for further legal actions and consultation, the borrower can forward his or her case on an attorney

Mortgage Service Center – an Entity between Mortgage Lender and Borrower

What is a mortgage service center? Well, a it is an entity that acts as and has the responsibility of daily maintenance of any mortgage loan. In most cases, when a borrower get a loan, the lender will just process the loan, the daily transactions are often given to another company – who are the service center. In taking these works, they will gain a small portion of the mortgage interest, perhaps 0.6%.

We are aware that most mortgage payment is paid monthly. Every time a monthly mortgage is paid, these mortgages servicing company will be the one that handles these payments, gets their share of the mortgage, and gives the rest to the lender and send out a new statement to the mortgage owner. The center can change several times in the duration of the load, depending on the preferences of the moneylender.

Let’s take a typical scenario of US based service center. If the company was change by the lender, then the borrower will gain rights along it as well. Firstly, notification regarding these changes must be sent out to the borrower 15 days in advance.  Accompanied with this is an extended grace period in case the borrower sends out the payment to the previous mortgage service company. In most cases, this grace period has duration of 60 days. To learn more about these provisions, they are detailed and cannot be amended in the United States Federal law.

Now, you can see that being or having mortgage service center is a great business, for most people make their payments monthly. There might be late payments of course, but because of the advancement in technology, processing and daily maintenance of these loans is becoming fast, easy and more efficient on the part of the center for all transactions are now automated. A sample of these automated paying is electronic payments.

On the downside, the cost for mortgage service is increasing dramatically every time a borrower fails to pay on time because they must make sure that payments are done promptly. The cost increases due to the pursuing of these borrowers. Nevertheless, when a lender partners with a mortgage center, these typical scenarios are usually added as additional fees for them and are billed on the borrower’s next mortgage payment.

In some cases that the borrower still fails to pay the mortgage, some lender and mortgage center result to foreclosing the property for auctions. They can handle the foreclosure or give it to the bank which will be another entity of these transactions. But this still depends on the agreement among the lender, the bank and the mortgage service center.