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Bad Credit Funding Basics


New Home Purchase Mortgage Loan
There are many advantages to purchasing a home, the top reason is to have the value of your home grow (equity). Each monthly mortgage payment with housing values rising, you're building equity in your home. Some people believe that a mortgage payment is more per month than paying rent...actually in most circumstance it's cheaper to pay a mortgage. Before purchasing your home, investigate how much the payments will be, tax benefits, monthly bills and compare to renting a home. Don't stop at the monthly payment, a mortgage will probably be a bit higher, but with other items in the equation (like taxes benefits) you could end up costing less "overall".

The biggest thing you'll do in your life, financially, is to purchase a home. Before you start house searching, you should make sure your personal credit report is clear of any derogatory information. Your credit lets you know who (if anyone) has derogatory information about you, if someone does - true or not, taking care of it before the loan process has started is best. Clean up as many items as possible so your loan goes smoothly. Order your credit report from ALL of the top three bureaus, because not all will have the same information listed, but you can guarantee that the mortgage company will check all three! Here are a list of the three you should check:

When should you buy a home?

Pros:

  • Less expense moving every year or so at lease end.
  • To give your children a stable home or to start a family.
  • To gain equity for your and your families future.
  • Receive large tax benefits.

Cons:

  • Routine and unexpected house upkeep.
  • This could mean a change in lifestle.
  • Less eating out type of activities to begin with.

Do you know what you want - can you afford it?
Can you buy the home you need or want? Are you willing to compromise for a couple of years? Are you sure what you can afford? It may be best to seek the guidance of a financial professional / loan profesiional before making such a large purchase. Get the information you need, click here and fill out our on-line form. The mortgage pro that calls you, can address any questions you have and will be able to give a FREE rate qoute. They should be able to give you the name of another financial professional if you need. While your here on our site, why not check out our on-line mortgage calculators?! The seven calculators will help yousee many basic financial senerios and comparisons. These should not be taken as final say on whether you can purchase a home, because everyone's financial situation is different - use these as GENERAL information only.

How much house can afford? Here's a few items to help you figure that out:

  • Your income amount.
  • Amount you have in stock, bonds, and other interests.
  • Amount of any debts, auto credit accounts, etc.
  • Amount of any retirement accounts including SSI or DI.

Find the correct home for you and your wallet! The number one step is find out how much you can afford! After you have the figures for the above items, go to our calculator page and compare. Once you know how muych hose you can purchase, you'll know the price range you can look at. This keeps you from the heartache of finding a home you can't afford.

The next step to find out how much home you can afford, is to look at all of the initial and continuing expenses associated with you purchase. A couple of these expenses are:

Have the funds for a deposit. You'll need at minimum 3% of the purchase price in cash, but this amount could be as high as 30%, depending on the housing market, seller, and your loan requirements.

Have the funds for closing costs. The amount needed will be at least 2-6% normally.


Mortgage Loan - Refinance
Do you need to address certain family expenses, such as education costs or to reduce how much you pay to credit card companies each month and save thousands on the life of the loan? Find the best loan and rate! Find out more...

Not sure if you should refinance or not? Well here are things to think about -

Costs & Fees :

  1. appraisal
  2. home inspection
  3. banking
  4. attorney
  5. interest payments

Refi process:

  1. Know your needs and options, use our on-line calcs.
  2. Go to your a professional mortgage broker/comapny/bank and pre-qualify.
  3. Then get a pre approval letter (most sellers/seller's agents will want to see this).
  4. Finish your loan application and contingencies.
  5. Order an appraisal.
  6. The last step is to close. You, your loan professional, escrow company (and sometimes your realtor) will be involved with this process.

Mortgage Loan - Second
Second mortgages can provide you with the cash you need by borrowing against the equity in your home. The interest rate on this type of loan is usually low. The house will be held by the bank as collateral to assure repayment to the bank.

What amount of funds should you borrow?
You may be able to borrow up to 85% of your home's appraised value after subtacting the dollar amount you still owe. ny open credit accounts, bad credit remarks, car loans, other unsecured loans can affect the loan amount as well.

What will your new rate be?
Before receiving your loan, be sure to check and see what your new interest rate will be. This could mean a big difference in your monthly payment! Be aware. Also check and see if your loan is fixed or variable...this option may not affect you right now, but it will in the near fuure.

What are the costs of closing?
Closing costs are fees you pay to get your loan. The type o fees you'll pay are (partial list):

  • Escrow fees
  • Title fees
  • Appraisal fees
  • Filing fees

...just to name a few! Check with the seller and the mortgage comapny to see what fees they may pay or will partially pay to reduce costs.


Mortgage Loan - Home Improvement
Thinking of updating the look of your home? Want to change a 3 bedroom house to a 4 bedroom house? Need to update your aplliances? Need to add landscaping? A home improvement loan will able to take care of these. This loan type allows you to keep mortgage you have now, while getting cash out of the equity in your home for the remodeling project(s).

What is the affordability?
A home improvement loan is a fixed loan (normally). This means stability in your monthly payment. This mortgage will come as a seperate bill. This helps in paying it off faster, if you so choose.

What is the cost of home improvement?
This really depends on what you want to do. A re-face your cabinets will cost a lot less than adding a bathroom, so get your project estimated by a professional contractor. If you're unsure of the amount you'll need, then a line of credit loan will be the best loan for you. A line of credit loan allows you to continually draw funds out (of equity) so you have a steady supply of cash.


The types of home improvement projects which fall under this type of loan

  • Increase the size of your home by adding a room or bathroom
  • Addition of a spa or pool
  • Addition of a garage
  • Addition of a deck or porch
  • Replacing all windows
  • Remodeling your Kitchen or your bathroom

Sometimes, without having equity in your home, you can receive cash as well, IF and only IF you home improvement adds REAL value to your home and will increase the value of your home. An example of this is, if you're going to add a room for $20,000, and this room will increase your houses value by $50,000.


Mortgage Loan - Home Equity
Your home's worth in the marketplace, minus the amount you still owe becomes equity. This amount is owned out-right. For example, if your house is worth $300,000 and you still owe $150,000, then you have $150,000 in equity to borrow from.

Your home will be used as colateral, so if you fault on the loan (don't make payments) the bank will be able to recoup funds. Be advised that a home equity loan will reduce the amount of home equity you've aquired. So out of that same $100,000 of equity above, if you borrowed $50,000, then you would be left with $50,000 in equity. Pretty simple. Check out more by using our on-line calculators.

Home Equity Loans and what homeowners can do with them:

  • Remodeling projects
  • Kitchen and bath upgrades
  • Child's cloolege education
  • Pay off credit cards and misc. debts

Mortgage Loan - Home Equity Line-of-Credit
This loan also uses equity to supply you continous funds (within the limits the bank and you decide upon). This loan is comparable to a Home Equity loan, with two major differences:

  • Instead of receiving a check in the full amount, the money is left in the bank and you can draw on it as you need it. This helps if your unsure how much money you will need in order to remodel a room, or other expense. You can write checks as needed.
  • The loan will not have a fixed rate, but instead it will be variable. This may not matter to you or your long-term finances, but chack with a financial advisor to make sure. This issue may also raise your monthly mortgage payment.

Home Equity loan paperwork you'll need to have ready:

  • Contact info for you mortgage company
  • An appraisal on the property to be used
  • Value of home when you purchased it
  • Date you bought the property
  • Amount of liability on property (still owe)
  • List of savings account(s), with balances
  • List of other investments in realestate (with purchase price and liabilities)
  • List of retirement accounts (401K, IRAs, Pension, etc.)
  • Current contact information
  • Current income (pay stubs and or w-2 paperwork)
  • Have your social security number

Mortgage Loan - Debt Consolidation
More and more people find themselves getting deeper into debt. Whether there's a planned event, like a child's education or a sudden unexpected emergency or death in the family, financial recovery can be difficult. Here are a few ideas on how to manage debt:

Be debt free
Everyone gets bombarded with credit card and charge account applications almost everyday. And most companies offering credit, will supply you with either too much credit or to high of an interest rate, which makes paying off the account virtually impossible.

Be credit wise bfore applying for a credit card, record your spening habits and look at it every month to see where you may be spending too much money. You may be suprized...for instance, say you buy lunch everyday at work...this means you could spend anywhere between $150-$500 a month just for lunch. That would mean you'd spend between $1800 to $6000 a year! You may not think that's a lot, or that buying your lunch is well worth it, however, with other monthly spendatures it may add up to be quite surprizing. Be aware so you can be wise with your money. Once you have your monthly spending optimized, then calculate and see if you can really afford a credit card monthly payment, or interest.

Another way to help yourself be debt free, is to document all unplanned expenses that have happened in the last 12 months. After documenting these items (with cost) start to include these in your monthly budget. For instance, most people don't put away any money to fix their car. So if you know you spent $300.00 in the past 12 months on your car repairs, maintenance, fluid replacements, etc. then start next month putting away $25.00 for the next servicing. This way you'll be prepared and there won't be any financial emergency or other bill(s) not getting paid in order to fix your car. Why $25.00 you ask? Well $300 divided by 12 months in a year equals $25.00. It's that simple, well it does take willpower to keep track of your spendingand HONESTLY evaluate the results.

These two methods can help you keep out of debt or from getting further into debt, but what if your already in debt? Well that's where we can help. We have experienced professionals in your area waiting to help you get out of debt.


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