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Guide to Mortgage Trips
The Real Estate you own Is Your Best Investment. One of the facts often forgotten is making extra principal payments on you mortgage. You probably have heard the concept of making extra principal payments to reduce interest and payoff your mortgage much earlier. The concept may be simple, but people overlook this all the time. A typical promissory note amounts to incredible interest over thirty years. For example, on a thirty year $100,000 loan at 9%, you will pay over $189,000 in interest.
If you have a cash flow on your rental properties or other mortgages, consider using it to make extra principle payments. By making extra principle payments, even just a few, you can save lots on interest. Another example, would be if you paid an extra $60/month the loan described above, you would save $49,000 in interest and pay off the loan much earlier. If you paid an extra $100 per month, you would save over $75,000 in interest and pay off the balance ten years earlier.
Save Money on Late Fees. If you one of those persons that sends payment at the last minute and are in danger of paying your mortgage late, send your payment express overnight mail. The cost of doing so is will probably be much less than your late payment. It will also not look bad on your file. An example of a 5% late penalty on a $2,000 payment is $100. Sending the payment via Federal Express will cost you less than $20.
Tips on Holding a Mortgage in Default. Example, if you sold a property and took back a mortgage, you have an option to your foreclosure procedure . . . sue on the promissory note. Remember that a mortgage is security, and you can always forego the foreclose proceeding and sue the borrower for nonpayment on the note. This may be desirable if the property has little equity and the borrower has other assets to attach. However, if you have to elect one remedy or the other; once you choose to sue on the promissory note, you waive your right to foreclose the property.
Bankruptcy- A borrower in default can file for bankruptcy to stop your foreclosure proceeding. Once the bankruptcy petition is filed, the state court foreclosure proceeding is subject to an automatic stay (which means you must stop all of your collection efforts). This might delay your foreclosure. As a secured creditor you will have first dibs at the property over unsecured creditors. You can have go into federal court and ask the judge to have the stay lifted against you. However, if the debtor files for chapter 13, he or she may be able to ask the judge to force you to accept a payout plan. Either way you all of your efforts will get you paid.
Consider a Deed- If you are in a mortgage state, the borrower can sometimes delay the proceeding for months by simply filing in writing against the complaint, raising the number of defenses. Sometimes on of the best way is to try to work it out with the borrower. But make sure that you?re not shortchanging yourself. It may be less hassle and cheaper for you to waive the back payments. That gives you the property back and that is what the objective really is. Remember that it might take time for the process, but in the end it will be well worth it.
Home Mortgage Loans After Bankruptcy - Can You Get Approved for a Home Loan?
After a bankruptcy, you can get approved for a home loan. Just be prepared to pay several points above conventional rates. However, if you have a large down payment or wait two years, your mortgage rates will improve to near conventional rates.
Dealing With A Past Bankruptcy On Your Credit Report
A bankruptcy will stay on your credit report for seven to ten years. However, it stops affecting your credit significantly after two years. So if you have established other good credit habits, you can qualify for market rates in no time.
But before you shrug off your bankruptcy, check your credit report to be sure that all accounts that were part of your bankruptcy are discharged. It?s not uncommon for paperwork to not get processed, leaving a negative mark on your report.
Other Helpful Factors
A down payment of 20% is expected for conventional rates with a traditional loan. Anything less and you will have to either pay a point or more at closing or additional loan interest. The same is true with sub prime loans. However, larger down payments decrease your rates.
Significant cash reserves and a large income can also offset your credit risk. The amount you want to borrow is also a factor. The lower your debt to income ratio, the better score you will get.
It?s also important to remember that not all lenders will treat your application the same. So it?s important to shop around for the right mortgage with the right terms.
Shopping Mortgage Lenders
If it has been less than two years after your bankruptcy or you know you have poor credit, start shopping with a sub prime lender. They deal primarily with people who have adverse credit. They can also offer you a lot more options than a traditional lender.
For instance, sub prime lenders have easier terms to qualify for a zero down mortgage. You can also opt for a future refinance with your mortgage when your credit score improves.
Remember that you have many financing options for a mortgage, even with a bankruptcy in your past.
Poor Credit Home Mortgage Loans - Getting a Loan with a Low Credit Score
Getting a home mortgage loan with a low credit score is only a few clicks away. With online sub prime lenders, you can get financing, regardless of your credit situation. But even with bad credit, you can get good rates and terms by doing some checking first. Fortunately, online lenders make this easy.
How Low Is Your Score?
Do you know what your credit score is? Do you know what?s on your credit report? If not, you may want to check. For one, you may be surprised that you have a score 620 or higher, even with a few late payments. Even people with a bankruptcy, discharged at least two years ago, can have a good score.
It?s also important to be sure that you aren?t getting needlessly charged for mistakes on your credit report. Double-check that all the information is accurate. Otherwise, report it to the credit reporting agency for them to investigate.
Dealing With Sub Prime Lenders
Sub prime loans are provided for those with scores less than 620. However, these loans can be offered through a traditional bank or a sub prime lender. With more and more financing companies dealing with sub prime loans, you have more options.
Before you accept any offer, you should search out mortgage quotes first. Most online lenders will provide you with near instant quotes, without having to peek at your credit report. In a few minutes, you can have dozens of offers waiting for your inspection.
What To Look For
Sub prime loans have many more options than conventional loans. You can adjust terms, rate, caps, and down payment. All of this affects your rate and closing costs, so be willing to negotiate.
If your primary concern is getting a low rate, opt for such terms as ARMs, large down payment, and future refinance options. For those with a goal of little to no closing costs, ask about the zero down option.
Be sure you are comfortable with your lender. They should answer any questions you have. And don?t feel pressure to sign the first deal you are offered. Make sure it?s an offer that meets your goals.
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