It is an American dream... buying a house of your dream... a house you can proudly call a HOME. However, buying a house can be quite tricky because your head tells you one thing and your heart tells you another.
So, before you go ahead and think about getting a home mortgage to buy a house or a condo/apartment or receive commercial real estate loans to build mercantile buildings make sure to research and understand basics of loans.
First and foremost know your personal finances: i.e. How much do you make in a month? What is your household cost (utility, car payment, student loans, and etc)? Figure out your personal goals (do you prefer traveling or do you engage in lots of social events and gatherings)? Remember... everything costs money and if you are willing to stay home then make the financial commitment to buy, but if you rather travel and socialize then buying a home might not be the answer for you. Prioritizing your commitments will enable to make a sound decision because what you have left will be the mortgage payment.
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Moreover, know your credit history or your credit score before going ahead to the bank to receive a real estate financing. There are many online sites that will provide you with three credit scores so utilize the internet.
If you are either a first-time home buyer or just trying to refinance home mortgage you already have there are few things potential home buyers must (or at least should) possess before lenders determine if you are worthy of a home financing loan from them.
1) What is your credit score or FICO scores? This is a very important factor and usually the first factor lenders glimpse through before going any further into their decision making. Generally speaking, banks want at least 650 credit score; however, these candidates will pay higher upfront and interests costs (if the banks are willing to take a chance on this loan). It's simple... higher the credit scores the better chance you will get a loan.
2) Potential lenders require job security from their applicants - usually two year history.
3) If you own a business then you are required to show documentations of your business history for two years or so; however, you can file for a "No-Doc" loans. No-Doc loan is specifically designed for individuals with income not paid through traditional paychecks or financial privacy is an issue for the applicant.
4) Income... income... income. Credit scores aside some lenders are willing to take on "high-risk" loans as long as you can show proof of their income, and as long as their monthly debt payments are at least 41% or less than your gross income.
5) Down Payment is another important key factor when banks/lenders are deciding on a loan. Before the housing "crash" many banks/lenders gave out loans to individuals with little to no down payments (or 100% loan). Today most banks require at least 10% down payment to receive a reasonable interest rates; however, if you can put 20% down then the banks will offer great mortgage loan rates.
With everything said, it is can be quite depressing for individuals who are caught in the middle. There are plenty of people with bad credit scores with higher income level then the debts who are trying to fixed the problems they have created or was created with no fault of their own in the past.
It is a vicious cycle... how can you fix your credit problem if no lenders/creditors are willing to take a chance on you to make your credit scores better?
Well... there are few loans available to individuals with similar problems, but it can come with a hefty price. Bad credit mortgage is designed for people with bad credit history due to default payments or late payments, bankruptcy, and etc. Unlike what you might perceive from the terminology of the loan "bad credit" this type of home equity loans interest rate has decreased dramatically over the years.
There are few lenders (both private and public) who are willing to mortgage bad credit loans so it is important for the applicant to research privately or hire competent mortgage brokers to find the best possible mortgage quotes and rates for you.
Just remember... not all lenders are equal, and not all banks are the same. You might get special services or leniency from your bank (or small locally owned banks) because you have already established a relationship with them vs from large banks with no personal interest in mind of you. At the end of the day... it is all up to bank's discretion, after you provide them with all necessary paperwork, to say "yah" or "nay."
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