Anyone applying for a mortgage has wondered what a bank really wants to see on a mortgage application. There are so many different pieces of information that are asked for, but many people want to know what parts of those forms banks really care about. These are those things.
Banks use your credit score and credit history to determine what kind of financial risk you’ll be. Few people realize, however, that each bank looks at these things a little differently. Some banks will only look at the score and determine whether or not it’s high enough to get a loan.
Other banks will use the information in the credit report to determine their own credit score of sorts. For example, some banks will put a greater emphasis on the history of previous mortgages than the credit bureaus, or they will ignore information about closed credit card accounts.
Cash on Hand
Since the collapse of the housing market several years ago, a lot more banks have become interested in how much cash a borrower has available to spend.
Essentially, this is a way of checking to see if a borrower has the means to handle an emergency such as a job loss or a major home repair. Because of this, the money usually has to be in a savings account or some other place that it is easily accessible.
While the exact amount of money needed will vary between banks, most are looking to see if you have enough saved to make about six months of debt payments or three months of all of your expenses. In addition, you’ll need to show that you have enough money available to pay for your closing costs.
Banks are also very interested to see how much you owe on other loans such as your car loan and credit cards. This piece of information tells them two things.
First, it gives the bank a picture of how reliant on credit you are. The more debt you have, the less likely it is the bank will approve you for more credit.
Secondly, the amount of debt you have tells the bank how much you have to pay to other sources each month. This gives them an idea of how much more monthly payment you can handle.
Each bank considers these factors differently when they consider a mortgage application. Keep in mind they may consider other factors also. When you are working with a mortgage lender, make sure that you have looked at these three areas and are ready to work with a mortgage lender. Once you have everything in order you will be able to find the house that works best for you and enjoy homeownership.
5 Things Every Mortgage Lender Looks At
If you’re thinking of buying a new home, you probably already know that you can’t just walk into the bank and hope they plop $200,000 on your lap. If it were that easy, everyone would probably have a home and later realize they can’t afford it.
To help prevent this type of situation, applicants have to go through a rigorous application process. Since a mortgage lender looks at more than just your credit score, it’s important to know what else they look at as well. To give you a better idea of what they look at, here are 5 MAJOR things they research when approving your application:
#1 Your Income
Banks love it when you have a steady income. The longer you have worked at a job, the better you look in the bank’s eyes. If you haven’t been at a job for more than two years, you may want to wait until that anniversary hits.
Remember, though, that you have to prove that you work at the job with tax returns. So if you have cut grass under the table for five years, there is no way to prove you’re making a living.
#2 Debt to Income Ratio
Taking the income that you make, mortgage lenders are going to factor your debt to income ratio. If you have more than 30 percent debt against your income, then you probably won’t get approved since you will be deemed a risk to the bank.
For example, if you made $50,000 a year and your debts were higher than $15,000, you would be on that borderline 30 percent debt line.
#3 Down Payment
The more money that you can plop down on the mortgage, the better your chances of getting approved are going to be. Experts generally recommend that you place at least 20 percent down to avoid PMI. Known as private mortgage insurance, this is an insurance policy that the bank forces you to carry if your equity is less than 20 percent.
So if your home is worth $200,000 and your mortgage is more than $160,000, you’re going to have to carry that insurance policy no matter what. If you can, try to pay at least 20 percent if you can afford it.
#4 Credit Score
While a credit score does play a big factor, don’t worry if your score is bad. FHA loans and other banks have different guidelines when it comes to your score. So don’t just check with one bank and get denied. Instead, talk with at least three to five bankers before giving up.
It also doesn’t hurt to work with a mortgage broker because these brokers can work with hundreds of banks to help you with your situation.
#5 The Appraisal
Let’s say you find a dream home and the sellers of the home are very eager to sell to you. Even if you do get approved for a mortgage, the bank won’t lend to you if the appraisal comes in less than the purchase. So if you put an offer of $250,000 on the dream home and the appraisal comes in at $220,000, the bank won’t accept anything less.
If you’re going to buy a home, it’s important to know the value before submitting an offer, because even if you do get approved, the appraisal can have the final say so.
While this process may seem personal, it has to be! Remember that these banks are lending you a lot of money. Be honest, let them know what’s happening and try to supply them with all the paperwork necessary. If you feel you meet most of the criteria mentioned above, it’s probably time to start shopping for a mortgage!
Find A Mortgage Agent Or Mortgage Broker
If you are trying to apply for a bad credit remortgage loan, then you need to consider making use of a mortgage agent that comes with bad credit consolidation. Some clients having bad credit make an effort to get in touch with conventional loan companies when applying for the home mortgage.
Nevertheless, in case your credit is much less than perfect, these types of loan companies might not be able to help you. To the other hand, some conventional mortgage loan companies have started providing bad credit remortgages. Now, for a broad assortment of loan companies, a mortgage agent could be your ideal solution.
Know About Mortgage Agents or Mortgage Brokers
When looking for a good remortgage, mortgage agents act as the middleman. It’s essential to examine loan provider offers prior to taking a mortgage. Sad to say, a lot of homebuyers bypass this stage. Evaluating loan providers is actually time consuming and tedious.
Therefore, people in the rush to buy a house tend to make the mistake of submitting only one mortgage application and accepting the very first offer.
Intelligent homebuyers recognize that evaluating loan providers might save them a lot of money. If utilizing a mortgage agent, you don’t need to get in touch with every mortgage lender. Instead, the mortgage agent will carry out this for you personally. Furthermore, mortgage agents can make the process easier as they will handle much of the paperwork.
Why Need A Mortgage Agent When Apply For Bad Credit Remortgage
Every single homebuyer carries a different condition. Therefore, there are different mortgage programs out there to accommodate different borrowers. For instance, some loan providers specialize in mortgages for people with bad credit, bankruptcy, no credit, foreclosure, and so forth. In addition, you can find mortgage programs designed to offer you closing costs or down payment assistance.
Mortgage agents get access to numerous loan companies and mortgage programs. For that reason, they can manage to get you the best mortgage package deal. Simply because mortgage agents having a connection with many other loan companies, they able to get hold of several quotes for you personally. This enables you to compare a mortgage offer and terms easily.
Finding a Good Mortgage Agent
It’s crucial to select a mortgage agent having a good reputation. You must avoid bad credit lenders. Even though there are many mortgage companies advertising heavily in the market, this doesn’t really guarantee they will offer you good service.
Rather, you should make your homework by referring to your family, friends, colleagues or search online for more information before making up your decision.
If you have decided which mortgage agent to go with, you should contact the Better Business Bureau to ensure that a particular mortgage company doesn’t have any bad record.
In the same way, if you are using an internet mortgage broker service, get more information on how good the reputation of the company. An additional method to discover a good agent would be to seek advice from a list of top recommended mortgage companies.
How to Put an End to Creditor Harassment
According to a report by the Alliance Group, 39% of complaints at the Federal Trade Commission (FTC) deals with debt payment demand that was not owed at all! Sometimes, creditors ask for more payment than what is legally allowed.
Despite the enforcement of the Fair Debt Collection Practice Act (FDCPA), which prohibits debt collectors from deceptive collection practices, some creditors could not care less. They seem to believe that due to lack of time or awareness, debtors would not knock at the doors of the court.
So, if a collection agency calls you repeatedly or uses abusive language, you must consider putting an end to this kind of mental harassment immediately.
Here are some useful tips you can use against collection agencies to stop the annoying bill collection harassment tactics:
1. Keep a record of all the telephone calls
The first step to stopping creditor harassment is to document every interaction with your creditors. Make sure that you note down the date, time, the name of the person you spoke to and the company they called from.
Furthermore, you must note down the precise conversation you have had with the creditors. You can record the telephone conversation.
2. Seek legal help
Contacting an attorney and filing a complaint is another option. Your attorney can contact the creditors and instruct them to direct all calls to him.
However, you must make sure that you find an experienced attorney who knows how to deal with creditors. A consumer attorney will even advise you on the appropriate course of action. He can even represent you in court.
3. Send the Creditor a written request
You can also send the debt collectors a written request and ask them to desist from calling at your home or workplace. Let them know that you are aware of the Fair Debt Collection Practice Act.
This law can be enforced against creditors who continue to harass you even after you send the letter. Keep a copy of the letter as well as the signed return receipt for your records. You will need it as a piece of evidence if you decide to initiate a lawsuit.
4. Negotiate with your creditors if you get the opportunity
There might be an opportunity to reason out with the creditor. Exploit every such opportunity, be it via phone calls or personal meetings.
The creditor might be open to discussions on a debt repayment plan, or even a full payment of the debt at a future date. Negotiation with creditors might help in reducing the interest rate while paying off debts.
Creditor harassment is one of the most unpleasant experiences anyone can ever come across in his life. Do what you can to stop it, even it means hiring a lawyer.