Tag Archives: mortgage loans

Buying a Home When One Partner Has Bad Credit

Because both of your credit scores will be used by the lender when you apply for a mortgage together, one partner with bad credit could result in denial of your loan application or an offer to lend with a higher interest rate. Following are some tips for dealing with bad credit when buying a home with your partner.

download1. Under the Federal Fair Credit Reporting Act, FCRA, nationwide credit reporting agencies must provide individuals with a free copy of their credit report once every 12 months. Those agencies include Equifax, Experian and Transunion. Both of you should obtain copies of your reports and review them to ensure that they are complete, accurate and up to date before you apply for a mortgage.

According to the FCRA, both the agencies and the entity providing the information are    responsible for correcting incomplete and inaccurate information on your report. If you find inaccurate or missing information, you should let the reporting agency know what information is inaccurate. The agency will then conduct an investigation by notifying the information provider that will, in turn, complete an investigation and report back to the reporting agency. You will receive a written copy of the results of the investigation and, if it results in changes to your credit report, a free copy of your credit report. That report does not count against your once every 12 months free report.

2. If your partner’s credit report is accurate and complete, you should explain the reason for the bad report to your potential lender. For example, reduced income as a result of unemployment, illness or other unexpected events that occurred. This may make them more willing to work with you.

3. Lenders may feel more comfortable giving you a mortgage loan if you pay a larger amount of money for your down payment, generally more than 20 percent. This may make the lender more comfortable about getting the house back if there is a need to foreclose.

4. Consider delaying the purchase of a home until the partner with bad credit has improved his credit. According to the New York Times, correcting any credit report errors, paying all bills on time for at least a year and paying down credit card balances is a good way to raise your credit score.

Mortgage lenders look at your credit report, your income, your debt to income ratio as well as the condition of the home and its current market value when making a decision to approve your loan. It is possible that, once all factors are considered, the lender would be willing to finance your home for you.

The first step in purchasing a new home is to speak with a local LGBT real estate agent at www.GayRealEstate.com. He/she will have the knowledge to assist you through the process, including referring you to the appropriate lenders.

Past bankruptcy, foreclosure or short sale? Gay Realtor reports “Second Chance”

The Federal Housing Administration is giving some former home owners another shot at home ownership. The FHA sent a letter to mortgage lenders stating that it would offer mortgage insurance to borrowers who once filed for bankruptcy, or who lost their homes through foreclosure or short sale during the recession.

Past bankruptcy, foreclosure or short saleStill, potential borrowers must show they can meet all other FHA requirements and that they are no longer financially constrained. Borrowers also will have to undergo housing counseling and FHA is requiring lenders to verify that at least a year has passed since the foreclosure or an economic event” that caused the foreclosure or bankruptcy.

“FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage,” according to the letter FHA sent to lenders.

Source: FHA offers mortgage backing to the once bankrupt, HousingWire

Posted on August 19, 2013 in Gay Real Estate News

Home Refinancing Basics

Home Loan Refinance Options

In today’s world of tight credit standards, government confusion, and record-low interest rates, it is beneficial to every homeowner, regardless of status, wealth, or property type, to know the home refinancing basics.

Homeowners all across America as well as many other countries are clamoring to take advantage of these low interest rates, and in order for them to be successful, they should consider three factors:

  1. Refinancing only makes sense if the long term savings outweigh the cost of refinancing.
  2. Homeowners should be very thorough in researching and selecting the best loan option.
  3. The choice of financial institution is important.

Refinancing a home involves certain costs, also called “points,” “origination fees,” or “discount fees.” When considering whether to refinance, it is vital that points and fees be taken into consideration. The short term cost (or long term if a “zero point loan” that builds the cost into the new loan,) must be balanced with the anticipated savings, eventually leading to a calculation of how long one must own the house to make up for the costs and realize a savings.

If, for example, a refinance would lower the monthly mortgage payment by $100 and the points on the loan amount to $3,000, the homeowner would need to keep the home for 30 months before the refinance would start netting a savings.

After the mortgage crisis and mass defaults on sub-prime mortgages, it is more important than ever to research what type of loan to refinance into, specifically the term of the loan and the type of interest rate. Mortgages over a shorter term for example 15 years versus 30 years, have a much higher monthly payment but result in a substantially lower total cost of borrowing (interest.) Long-term mortgages have the reverse effect.

Loan variability means choosing between a fixed interest rate that is unchanging for the life of the loan or a variable rate, of which there are many varieties, with rates that change at certain points during the life of the loan. Each type has its own pros and cons.

As far as choosing which financial institution to utilize, the most important factor is to shop around. The holder of your current mortgage may offer a great savings of time in that they already have much of the necessary information and potentially also a monetary savings as a reward for loyal customers. Another option is to ask for referrals from your trusted real estate agent ~ they work with lenders every day… it’s more important to have a trusted adviser than to have an offer of ¼ point less from an “unknown” in another state.

There are nearly infinite banks and mortgage companies worth exploring, and only after researching the institutions as well as the above enumerated considerations of total savings and mortgage type can a truly informed decision be made.

Author Jeff Hammerberg is the Founding CEO of www.GayRealEstate.com ~ The Nation’s Largest Free Directory of Gay, Lesbian and Gay Friendly Realtors offering Free Buyers Representation, Free Sellers Competitive Market Analysis and Free Relocation Kits to Any City, USA.

Posted on September 27, 2011 in Mortgages, Refinancing