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Why a New Construction Mortgage is Different
Most people are familiar with the general process of buying a home and working with a Realtor. Usually, their Realtor will make suggestions on mortgage companies that have treated their clients well in the past, or the buyers will already have a working relationship at a bank that offers home loans. The loan process on new home construction is different because regional and national homebuilders package their lowest prices with the requirement to use their preferred lenders. This doesn’t occur for someone who is buying an older home, or working with a small custom builder.
As an example, if you visited a new neighborhood that is being built by Lennar, Beazer, or other large new construction builder you will see signs and banners advertising incentives like “Free Stainless Steel Kitchen Appliance Upgrades,” “All Closing Costs Paid Plus $10,000 in Upgrades,” or “Interest Rates As Low AS 3.5%.” When you inquire further on the details of these buyer’s incentives, they will be tied to using the company’s in-house lender, or a specific mortgage company that has a business relationship with the builder.
Now you are faced with a dilemma, as the incentives can be very helpful towards making the home more affordable, but the builder’s personal lender may not give you the best interest rate on your home loan. That upfront discount could, in fact, cost you more over the long term.
3 Types of Mortgage Brokers to Use
To ensure you get a new construction home loan with a low interest rate you need to get quotes from the builder’s lender, your banks loan specialist, and an independent mortgage broker with whom your friends or Realtor has had several successful home closings. Each of these individuals needs to give you a mortgage quote based on the same specifications for your personal buying situation. An example would be a $200,000 fixed rate loan with 0 points and 10% down. This is essential because each mortgage quote will be outlined differently, and having the same starting point will make it easier to compare numbers.
The lenders will also need a detailed understanding of your assets and liabilities, as well as permission to pull your credit score. Do not hold back on any of this information, otherwise the quotes are not worth the paper on which they are printed.
How to Negotiate Your Interest Rate
Now it’s time to compare numbers and put yourself in a place to negotiate your home loan. First off, it is important to know that you will often have conflicting numbers on your closing costs concerning taxes, HOA dues, and other non-negotiable items. These are costs the lender has no control over, but they will vary on your quotes because the outside mortgage brokers won’t have the precise information on hand for the county and neighborhood in which you are making your purchase. For this reason, you should use the builder’s preferred lender’s numbers, as they will have closed many homes in the neighborhood and have more accurate figures.
These non-negotiable items should not be confused with the loan origination and other lender fees, which are always negotiable. Your Realtor can help you decipher between the two, and your first step is to ask the other mortgage brokers to match the lender with the lowest lending fees.
Now that you have similar lending fees and correct closing costs, you need to give the other mortgage brokers a copy of your lowest interest rate quote, and ask them if they can match it. At this point, one lender will be standing out as the best. If it is the homebuilder’s lender, then you need to pay the $250-$350 loan application fee, submit the application to the lender’s underwriting department, and lock the rate as soon as you are given official approval.
If your best mortgage quote is from an outside lender, then you have an extra step. You must submit the loan applications to both the outside mortgage broker and the builder’s lender. While you will have the added expense of paying two application fees, this will ensure that you are truly approved for the interest rates you were previously offered and put you on solid ground to negotiate with your builder. None of the pre-approval numbers before the application are locked in stone until you have submitted all the papers, paid your fees, and been given loan approval subject to appraisal only. Many lenders have promised the sky, only to drastically change their numbers once the final approval is completed.
Now that you can show full approval, lower interest rates, and lower lender fees from the outside lender you can go back to your builder in a strong position and tell them to put pressure on their lender to match the rates or allow you to use your personal mortgage broker and retain the incentives they originally offered with the home. You can add further pressure on the builder by timing your closing near the end of that company’s fiscal year. Larger homebuilder’s will often sacrifice profit margins to make end of the year closing numbers, which adds to your ability to negotiate lower interest rates and prices.
While this process takes several phone calls and careful planning, the time you spend upfront to ensure you get a low interest rate on your new home loan can save you thousands of dollars over the years of your mortgage.
Discovering the average credit score can be found in three numbers; numbers that are based on a person’s borrowing and bill paying history. The average credit score also reveals information on other borrowers so that lenders can determine the credit behaviors of others and also discloses if you will repay what is owed in a timely manner.
A person’s credit score contains pertinent information on each of us, so that we look at our credit score we can have an understanding of our credit profile. One’s credit score has a strong impact on the interest rate when we borrow money. Being able to know one’s credit score also gives one the opportunity to question how accurate it is and negotiate with lenders, if needed.
You can sometimes get a credit score for free or there are times when you have to pay for one. In addition, you can sometimes get a credit score for free, especially if you are applying for a home loan and if the lender uses credit scores. However, if you find that you are not eligible for a free credit score from a home lender, you can purchase your credit score from the consumer credit reporting agency.
A credit score is calculated to find out and analyze the value of one's credit. What the mathematical models accomplish when calculating credit scores, is to consider the amount that you owe and the types and categories you owe. Then, they compare those numbers of repayment to your creditors amd to thousands of other consumers and come up with a credit score.
Things that impact your credit score include how you have paid in the past, how long your outstanding credit has been going on, how much you owe, the amount of inquiries from lenders, the type of credit you use, and just how much credit is available to you. Research has shown that the most important factor in your credit score is how much available credit you are currently using.
Most importantly, the average credit score for those living in the US—national average credit score for over 75,000 users is 664.25. This was calculated in April of 2009. The accepted average for a credit score is around 700.
Credit scores range from 300-850 and 850 being the highest score. The average credit score is around 680-700. Data has shown that only 13% of the population has scores over 800. However, 58% in the US have credit scores above 700. The reason the national average is around 680 is in part, due to some very low credit scores.
The difficulty of obtaining a loan to buy a home may have risen, but VA loans with bad credit are still available. The credit crunch has created an environment where home financing has become more difficult, especially for conventional mortgage loans. However, mortgages for military veterans are still available, and offer 100% financing as well. Most of these VA mortgages can be obtained with tarnished or even bad credit because the VA guarantees the loan to the lender or bank, and VA has not tightened their guidelines.
Mortgage lenders have increased their credit score requirements for most loans, but for VA loans, that is generally not the case. Someone with a low or bad credit score may still be able to secure home financing even if there score does not qualify them for conventional financing.
VA loans with bad credit are also available for qualified veterans even if they have no money to put down. VA allows the veteran to finance 100% of the purchase price, and in some instances (such as for EEMS - Energy Efficient Mortgages) the veteran can finance the cost of improvements on top of the price. VA loans also allow the seller of the home to pay part or all of the buyer's closing costs, taxes and insurance. This enables the buyer to purchase a home with literally no out of pocket expense.
VA loans are available as 30 year and 15 year fixed rate loans. Usually the rates on these mortgages are comparable to market rates on "regular" or conventional loans that require down payments of 5% or more.
The major difference, other than the down payment requirement, between a VA loan and a conventional loan is the lack of Private Mortgage Insurance (PMI) on a VA mortgage. Conventional loans with less than a 20% down payment require an extra insurance (PMI) portion of the montly mortgage payment that protects the lender against default or the buyer/borrower from not making payments. VA loans have a funding fee (usually a percentage of the loan amount, about 3%) that the buyer finances as part of the loan. This is a one-time fee and replaces the monthly PMI payment on the loan, thereby potentially saving the Veteran thousands of dollars over the life of their mortgage.
Home financing has changed in the last few years but VA loans with bad credit are still widely available and obtainable.
There are so many different types of investment you can get involved in, however you might want to think about using the services of a broker to deal with things for you. Basically brokers work for brokerage houses and are able to buy and sell on the stock exchange. You may think that it's not important to use a broker but the truth is that you do need one.
When someone wants to become a stockbroker there are a number of different tests they need to pass in order to get a license. It's not at all easy to pass these tests and the majority of brokers also have an understanding of business and finance and will have a Bachelors or Masters Degree.
First of all, you need to be aware of the differences between a broker and an analyst. Someone who is an analyst will look at the stock market and try to predict how things will go. Whether they should buy or sell a particular stock. A broker on the other hand simply follows the instructions you provide. Basically they analyze the market to tell you what you should do.
How a broker makes their money is via commissions on sales. So when you tell your broker to buy or sell some stock, they will make a percentage of that amount. However there are some that simply charge a flat fee regardless of how much the transaction is.
Another thing you need to understand is that there are a couple of types of broker you might want to use. There is the full service broker who can offer you more kinds of investments and may even provide you with advice.
A discount broker on the other hand won't normally give you any advice at all and also won't do any research. They just carry out the instructions and give you no other benefits.
You're going to have to decide yourself whether you want a full broker or a discount broker to work on your behalf. For the novice investor then a full broker is more than likely the better option to ensure you are investing wisely. They can make up for your lack of knowledge.
However if you're experienced in the stock market and feel you know what you're doing then a discount broker might be perfectly good.
Before you rush into anything, you will also want to think more about what you want out of your investments. Are you wanting to buy a home? What about retiring? Or perhaps you want to fund college education? Understanding your motives for investing is very important.
Unfortunately, people think they're going to become instant millionaires with investing. OK, so you might be really lucky, but it's very unlikely that this will happen. Instead it will probably be better to think about your investment over the long term and allow it to grow slowly. If you still want to make a quick buck, you need to look at what options you have in terms of high-yield, short term investing.
Talking to a financial planner is a very good idea and they will help you decide what sort of investing is suitable for your circumstances. They will be realistic about what you should and shouldn't expect.
If you are thinking about investing in gold whether as a full-time investment or as a means of diversifying your portfolio, you need to know a little bit more about investing in precious metals first. Many people today are turning to gold investment advice to help make sure that their investment is as lucrative as possible.
The average stocks and bonds investors love to diversify their portfolio by investing in gold and other means of gold trade. At the same time there is nothing like picking up some one ounce gold coins or bars to keep around the home. Holding physical gold bullion is indeed the most secure investment you could make. Irregardless of why you are interested in investing, you need the appropriate gold investment advice.
It is considered that gold is a safe investment due to its stability. It is this stability which prevents unexpected fluctuations and makes it an excellent choice for portfolio padding, a hedge against catastrophe and a safe haven investment. However, it is also very important to point out that while most countries no longer base their currency on gold, gold bullion and the Dollar are still invariable intertwined with one another.
When the Dollar inflates and becomes worth less, the value of gold increases. However, there is much more to the value of gold then one would come to expect normally. The truth is however, while gold value increases or decreases based on fiat currencies, it really doesn’t matter if you take a long term approach. See gold will always hold value and be able to be used as currency. The dollar may rise or fall, but gold has intrinsic value as money. It is the best investment you could make for a long term hedge against the fall of fiat currencies.
If you choose to invest in gold without receiving the proper gold investment advice, you may still make money; but it will take a much longer period of time. But it is when you know what to look for, that you are able to make greater profits in shorter periods of time. There is so much to learn, but one has to remember that all of the education in the world can never compare to actual experience earned through investing on a regular basis. So if you want to be profitable in your investments, then make sure that you have the knowledge needed to keep you in the game long enough to develop the necessary experience to make a good living through investments.
There are many ways to make money in investing, but today more and more people are turning to a gold stock investment because of its ability to maintain stability in the most turbulent of markets. Precious metal investments have always been a big winner time and time again. Not only is gold good investment for making money, gold is a great way to protect your assets as well.
Many investors use it as a way of padding their portfolios and providing a baseline of financial asset protection. This is important because if you make a mistake and loose money with one investment, having gold as well will limit the amount of impact that the loss has on one’s portfolio. In times of inflation, gold is a safe haven, in times of deflation, gold provides a hedge against falling fiat currencies.
Whether you are just getting into gold investment as a part-time hobby to help make you some extra spending cash for the end of the month or even if you want to invest as a means of creating a full-time income, making sure that you are protected is very important. While there is no real insurance in the stock markets, making use of gold stock investments and other gold trade options will help to reduce the amount of impact that any losses can create.
In the end, whether you invest in gold stocks, gold ETFs, or even gold mining stocks, your ability to be as profitable as possible will depend solely on your ability to insure your investments. This is the main goal of diversifying your portfolio and why so many investors continue to turn to gold investments, time and time again. As long as you take the time to become as knowledgeable as possible about investing and make sure that you are always protected, you can make a very nice income. As always though, remember that there is no such thing as getting rich quickly and easily as you have to work hard no matter what you do; and this includes investing in gold stocks and gold exchange traded funds.
Be careful in your gold investments, but always remember to never give up. You may not win every single time and as a beginner you will most likely loose more then you win. However, if you stay focused and vigilant, you will find that there is more then enough money to win.
Mortgages For People With Bad Credit: Be Careful Out There
Written by David WilsonNo, but beware! Traditional loans are going to continue to require more money down and FICO scores of 700-750 plus. In these recent and continuing times of economic chaos, how many people have not had some sort of "ding" on their credit? Jobs and pensions have been lost. Stock portfolios have been devastated. At least forty six million Americans are uninsured. Medical costs have bankrupted people or put them into "collections"......even some of those who actually do have insurance. While luxuries are being eliminated from our lives, gas, energy, and grocery costs are rising. If you haven't fallen victim to one of the catastrophes mentioned above, then perhaps some other equally bad or unavoidable situations have trashed your credit rating.
So what options are out there for those wanting to buy a home? There are some options, but it depends on exactly how bad your credit actually is. Lenders will tell you to repair your credit rating before you buy. That is sound advice, but it will not help you NOW. Right now, with full documentation, there are some great loans through FHA. Some require only 3-5% down payments. You would need to talk to a Lender who specializes in FHA to find out if they have a loan that would work for you. FHA is typically looking for steady income and a FICO score of around 550, depending on your area. If you are a Senior Citizen of 62 years of age or older, then you are really in luck. FHA insures a government backed program that is a type of reverse mortgage called a HEMC, which stands for home equity mortgage conversion. This can be used to get equity out of your current home that you don't "qualify" to refinance or get a second mortgage on. Even better, if you are 62 or older, have no home, but you do have cash, EVEN IF YOU HAVE NO INCOME AND BAD CREDIT, you can BUY a home through this program so long as you have the required downpayment. It is a complex program and not for everyone, but if you don't have any other choices it can be a lifesaver. Absolutely do not deal with any reverse mortgage lenders who are not HUD approved.
There is also always some Seller Financing out there, probably more now than ever before. They don't WANT to finance those with bad credit, but with enough cash down and a higher interest rate you might have a chance. A letter to the Sellers submitted with a purchase contract explaining "how" your credit got "bad" can often help. If it's You or Nobody, they might choose you.
Finally, there are "hard money lenders". Consider them the Loan Sharks of Mortgage Lending. With a BIG downpayment, they may graciously grant you a mortgage at an interest rate of somewhere between 18-26%. plus or minus and 3-5 discount points or more. If this is your only option, RUN quickly and rent until your situation changes.
Nobody really realizes how bad it is to have bad credit until they experience it themselves. In the past when you had good credit you would've thought nothing of taking out a loan, but now that your credit is impaired it might not be so easy. Of course, it's not an impossible thing to do. Despite the fact that there are lenders who are wary of those with awful credit, there are others who are a bit more forgiving. If you have bad credit and want to take out a loan because you need money now, then there are some things that you will need to consider.
First of all, you really need to question how badly you need to generate some money via a loan. You need to think about your current financial situation and whether a loan is really appropriate in this case. If you decide that you do indeed want a loan, it's pivotal that you look at all the deals on offer. It's tempting to go with the first company that offers you a loan but hold tight and talk to a few more companies to see what they have to offer. You have to fully understand what sort of loan you are getting in terms of the interest rates, terms, default penalties and monthly repayments.
When you finally decide which lender to take your loan out with, you can then set about putting together some details about why you are a good candidate for a loan. This means you need to look at your income, how steady your income is, what your current debt levels are, how much you are spending, what sort of job you have and anything else you can think of.
You want to show yourself in the best possible light so make sure you tell them about all the good things that you are and why they should lend to you. Lenders want to lend to candidates they feel can make the repayments easily.
Of course, there are other areas that need to be addressed in terms of your finances. Why do you want money fast? If it is because you need to pay back another loan then you really need to be getting some good financial advice. Often people let their debts spiral out of control and end up taking out loan after loan which is not healthy at all. Also, there are payday loan companies who are charging truly massive amounts of interest and what starts out as a small loan can end up absolutely massive. At the moment there are moves to cap the amount of interest that anyone will pay with pay day loans.
If you are looking to generate some money without taking out a loan then you should really look at selling some items that you have of value. There are loads of companies who pay you for any gold that you have. If it's not really all that good quality then you should see about selling to them. However if you have some really good quality jewelry then you should look to sell them via a jewelers.
Choosing Best Loans For People With Bad Credit
Written by David WilsonBad credit is a burden that can really hamper you financial freedom. You may have the same income as someone else, but they have a better house, better car, better clothes, better electronics and can take better vacations because they have good credit. This allows them to finance the better things in life and not have to put their plans on hold until they save up the money in 6-12 months. Plus, they get good interest rates, which make it cost less for them to borrow this money.
The best loans for people with bad credit are secured loans. This is for two important reasons:
1. Secured loans are easier to get. This is because you are giving the lender collateral to hold on to, just in case you don’t pay your loan. If you do pay your loan, then you get your collateral back.
2. Secured loans allow you to improve your credit score and graduate to better loan terms. This positive credit history is essential to getting unsecured credit cards and loans from other lenders.
So just what is a secured loan?
With a secured loan you will be given money from the lender and, in exchange, you will give the lender some collateral to hold on to. This can be valuable, your home, car, or even cash that is equal to the value of the loan.
You make regular monthly payments on the loan and are even subject to interest fees and late payment penalties. Your interest rate may be higher than most, especially if the loan is specific to those with bad credit. This higher rate makes it possible for the lender to take on ‘riskier’ borrowers, like you.
During this time, the loan company will report on your performance to the three major credit bureaus—Equifax, Trans Union and Experian. Assuming you keep your end of the deal and make the minimum monthly payments on time, your credit score will rise and help you secure future loans.
Once the loan is completely paid off, you will receive your collateral back. You can then try to get an unsecured loan or a secured loan with a better rate from another company (or from the same company if you prefer, which may be better since you have a history with them.)
In the event that you default on your loan, the company will keep your collateral and report your negative performance to the credit bureaus. This would be unfortunate, especially if you took out this loan with the aim of improving your score.
All in all, if you have bad credit, a secured loan is one of the best loans for you to apply for and may be the only type of loan that you have a chance of approval with. Plus, it will keep you from having to get money from subprime lenders who will charge you even bigger fees and stiff you with high annual dues and other feed in the process.
