 |  |  |  |
|
More Services Credit Report and Score (Free) Debit Consolidation Loan Auto Loan Cash Advance Request a Student Loan Request a Personal Loan Request a Credit Card Homeowners Insurance Quotes (FREE) Auto Insurance Quotes (FREE) Life Insurance Quote (FREE) Loan Payment Calculator Subscribe to our Newsletter |
Applying for a home loan or a home equity loan can be a daunting experience at best but if you know what to expect it can help. We will try to help you understand what is expected.
Following are a list of terms you should expect to run into: (we will explain each later)
1. Credit Score
2. Property Value
3. Prequalification
4. Pre-approval
5. Lender
6. Types of Loans
Credit Score - Credit scoring is a system creditors use to help determine whether or not to give you credit.
Information about you and your credit experiences, such as your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report. Using a statistical program, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points -- a credit score -- helps predict how creditworthy you are, that is, how likely it is that you will repay a loan and make the payments when due.
Improving your credit score.
Credit scoring models are complex and often vary among creditors and for different types of credit. If one-factor changes, your score may change -- but improvement generally depends on how that factor relates to other factors considered by the model. Only the creditor can explain what might improve your score under the particular model used to evaluate your credit application. There are programs available which can help you sift through the factors and improve your score.
Click Here for help improving your credit score.
Property Value - The value a piece of property is expected to be worth on the open market.
Determining the value of a piece of property will be based on many factors. The location of the property is a prime factor. The property's value is also linked to the economy of the area. For example, a nearby development of upscale homes can make the property more desirable and thus more valuable. Also the property lies in a community with a healthy growth rate, with more and more people taking up residence, and the demand for housing increasing. On the other hand, a sluggish economy, slow growth, and no demand will probably flatten or cause a decline the property's value. What the property borders on makes a difference. Is it next to prime beachfront Maui property, a cemetery, a shopping mall, or high school?
To help you determine the value of your property or the property you are interested in buying, Instant Home Valuations!
Prequalification - When you're under contract to buy a property, having your mortgage application denied (after waiting several weeks) may cause you to lose the property after having spent hundreds of dollars on loan fees and property inspections. Even worse, you may lose the home that you've probably spent countless hours searching for and a great deal of emotional energy to secure. Some house sellers won't be willing to wait or may need to sell quickly. If the sellers have other buyers waiting in the wings, you've likely lost the property.
How could you have avoided this heartache? Well, you may hear some people in the real estate business, particularly real estate agents and mortgage folks, advocate that you go through mortgage prequalification or pre-approval.
Prequalification is an informal discussion between borrower and lender. The lender provides an opinion of the loan amount that you can borrow based solely on what you, the borrower, tell the lender. The lender doesn't verify anything and is not bound to make the loan when you're ready to buy.
Pre-approval is a much more rigorous process, which is why we prefer it if you have any reason to believe that you'll have difficulty qualifying for the loan you desire. Loan preapproval is based on documented and verified information regarding your likelihood of continued employment, your income, your liabilities, and the cash you have available to close on a home purchase.
Lenders don't charge for prequalification. Given the extra work involved, some lenders do charge for pre-approval. Other lenders, however, offer free pre-approvals to gain borrower loyalty. Don't choose a lender just because the lender doesn't charge for pre-approval. That lender may not have the best loan terms.
Lenders - There are many institutions which are ready and willing to loan money on real estate among them are banks, savings and loans, and of course a bunch of "on-line lenders".
Banks provide you a personal contact and probably have a feel for local markets however they also have a profit agenda that may not be in your best interest. Banks can take as long as 60 days to approve your loan and may have stipulation about you and/or the property you are considering which must be fulfilled prior to loan approval.
Saving and loans follow the same guideline that Banks do with probably a few more stipulations.
The on-line lenders are probably the easiest to get quick approval for a loan and in some cases they will provide you with competing bids in order to obtain your business.
Types of Loans
Fixed Rate Loans
Basic fixed term, fixed rate loan -Choose this type when you want a fixed principal/interest payment over the life of the loan. There are options you may add to this type of loan. Check with the lender to see what they offer. (Reduced Rate Option, No Down Payment Loans, Low Down Payment Programs, Low Documentation, and One Time Close Loans)
Adjustable Rate Mortgage
Basic ARM - Choose this loan when you want start with a low payment or buy more home.
There are some options available with this type of loan. Check with your lender to see what they offer. (Basic ARM with Reduced Rate Option, Fixed Period ARM, and Fixed Period ARM with Reduced Rate Option)
There are also loans designed for people with various financial obstacles. (Less than perfect credit, Low cash for down payment, etc.)
Your Rights Under the Law - As a borrower, you have legal protections and rights under federal law. Fair Lending Laws Know your rights before you agree to take out a loan.
You have the right to get information about your loan terms in writing.Three days before you close on your loan, your lender must tell you in writing:
1. The finance charge on the loan (including costs for things like origination fees, points and mortgage insurance)
2. The annual percentage rate on your loan
3. The amount of your loan
4. The total amount you will repay, including all principle and interest
5. Your monthly payment
6. Any special terms, such as a variable interest rate or balloon payment
You have the right to get a loan without fear of discrimination. Lenders can consider many things when deciding whether to give you a loan and what loan terms you qualify for. However, they may NOT consider your race, sex, religion or nationality. Fair lending laws strictly forbid discrimination in lending.
You have the right to change your mind.
You have three days (excluding Sunday) after signing a home equity loan contract to cancel the deal, for any reason. To cancel the contract, you must notify the lender in writing. Send your letter by certified mail with a return receipt requested. Keep copies of your letter and all other paperwork. Within 20 days, you must receive a full refund of any money you paid to the lender.
A Credit Counselor can tell you more about your rights
Home Loan Home Equity Credit Cards Lending Tree Low Cost Quicken Links Ameriquest Credit Cards For You Credit Cards Features Credit Card History Credit Card Numbers Credit Card Types Your Credit History Credit Card Types
