Prerequisites For Loan Modification Credit Facility
In recent times, the mortgages and real estate prices have become unstable, owing to the uncertain market conditions. As a result, many homeowners are considering qualifying for loan modification facilities. To help the troubled homeowner, both the FDIC and the federal treasury are supporting, as well as encouraging home loan modification facilities, so people can continue owning their homes. Ideally, creditors don’t desire to liquidate any debtor’s home, and homeowners obviously prefer “to stay” in their homes even if they default, so the federal government tries to coordinate between the people and the lenders “problems” to work out the ideal loan modification agreement.
Borrowers, who have existing mortgage payment issues, and who are struggling to redeem their mortgage dues may be eligible for a mortgage modification program, if their annual income is not sufficient enough to cater to their mortgage payments, and are facing a risk of being delinquent. Homeowners may be eligible for mortgage loan modification even if they aren’t defaulting upon their payments. However, loan modification companies consider several factors – such as a loss of income, a significant increase in expenses, or an interest rate that will resent to an “unaffordable” level, before “they” draft out a loan modification agreement.
Here are three ways to know if you qualify for a loan modification program:
>> If you own your house, and occupy it as your primary residence
>> If your monthly mortgage payment is greater than 31% of your monthly gross income
>> If your mortgage refinance loan is not large enough to exceed the current “Fannie Mae” and “Freddie Mac” limits
Credit Requirements for VA Loan
Even though the VA loan is more lenient than conventional mortgage programs, there are still credit requirements in order to be approved for a VA loan. Most banks require a minimum 620 credit score and 12 months mortgage history with no lates.
Types of imperfections on a credit report that may affect the VA loan approval process:
- Collections
- Late payments
- Judgments
Payment History Factor
Re-payment history is an important factor in getting approved for a VA loan. Your rental and mortgage payment history signify your ability to pay your housing payment and will better qualify you for a VA loan.
If you lack credit history, provide explanations for any of the following:
- If you are a veteran who has been recently discharged and have not been able to establish credit
- Use cash instead of credit on a regular basis for bill paying and purchases
- Veteran has not used credit since reconciliation of bankruptcy and judgments
Bankruptcy
Bankruptcy does not immediately disqualify a veteran who is applying for a VA loan. If you have had a bankruptcy discharged over 2 years previously to applying for a VA loan it may not be considered. If the bankruptcy discharge was within 1-2 years of applying for a VA loan there are a couple things that are taken into consideration that may still help qualify a veteran:
- If you have obtained credit following the bankruptcy and made satisfactory timely payments
- If reasons for Bankruptcy were above and beyond the control of the veteran-Loss of job, medical bills, divorce, loss of a business etc.
Foreclosure
VA Loan Closing Costs 101
Whether you are applying for VA loan or any mortgage loan, a borrower has to pay the closing costs. But what exactly are you supposed to and not supposed to pay? If you’ve already began your research, you will notice words such as allowable and non-allowables. Veterans applying for VA mortgages or loans are only supposed to pay the “allowables.” David Reed, columnist for Realty Times and Mortgage Originator magazine, has created this easy to remember mnemonics (ACTORS) about the allowable closing costs for veterans:
Appraisal (aka Notice of Value, NOV) or inspection charges
Credit report fees
Title or title-related charges
Origination fees and points
Recording charges
Survey fees if needed
Now that you have an idea of what the allowables are, let’s take a quick look at the non-allowables. Here is a list of fees that CANNOT be charged to a veteran:
Document preparation, loan closing or settlement, attorney services for anything other than title work, preparing loan papers for conveyance fees, locking in interest rate services, photographs, stationery, mailing or postage charges, telephone calls, amortization schedules, general overhead, membership, escrow charges or fees, document preparation and / or assignment, notary, loan application, processing, loan broker or finders fee other than your mortgage company, trustee’s fees or charges and tax service.
Although a lender is not supposed to charge for non-allowables, there is such a thing as a “One percent Guideline.” This simply means that even though there are non-allowables, “the lender is allowed to charge a flat one percent of the loan amount and apply that fee to the various miscellaneous lender charges the veteran may not otherwise pay for,” according to Reed.
Obtaining a Jumbo Loan Mortgage
Purchasing a home for the very first time is an exciting and scary time for the first time home buyer. All sorts of terms are thrown out at you and you probably don’t understand most of them. But, when it comes to the type of mortgage that you are getting, you may need a jumbo loan mortgage depending on the size of the home that you are trying to purchase. Before you decide to move forward with getting a jumbo mortgage loan, you will want to find out all of the pros and cons of this type of mortgage since they are very different from getting a conforming loan.
One of the major points of interest that you are going to want to consider with a jumbo loan mortgage is that the interest rate you are going to be charged will be considerably higher. This means that you are going to have a high payment and you may need to have a larger down payment than you originally anticipated. Much of this is due to the risk that the lender is going to take when providing you with this type of loan. There is a lot taken into consideration for a jumbo mortgage loan and the risk for the current market price is one of the big factors that are taken a look at.
If you are refinancing within one year of your purchase, then you may receive a discount on your jumbo mortgage loan. This rate will vary but you could get up to 50% depending upon the company. You do need to keep in mind that you are going to pay more when you want to refinance a jumbo loan mortgage. This is because of the closing costs that are associated with the loan from the beginning.
Mortgage Refinance Loan
What I Should Know About Mortgage Refinance Loan
Before opting for A mortgage refinance loan, it is always better that you take into consideration your financial condition and requirement. There are plenty of options available with mortgage refinance loan so you need to be extra careful when selecting one. Ideally, you should choose a mortgage refinance loan with monthly installment set on the basis of your financial condition so there is no pressure on you in terms of repayment.
Fixed or Adjustable Interest Rates
Before applying for a mortgage refinance, you need to be clear what kind of loan package you are looking for. You can go for a loan with fixed or adjustable interest rates. Each has advantages and disadvantages but, in the long run, fixed interest rates are a much better option.
The main advantage of fixed interest rates is that your monthly installment will remain the same throughout the duration of the loan. With no increase in monthly installments, you will be able to manage your finances better.
Adjustable interest rates are perfect for individuals who have a comprehensive knowledge of the market condition. With adjustable interest rates, you can save plenty of money if you predict the market condition correctly. As there is lots of guesswork involved with adjustable interest rates, it is not a good option for people with bad credit. Any increase in interest rates can have an impact on your monthly installment. If you are not able to pay your installment on time, your credit rating is going to deteriorate.
Mortgage Refinance Loan