Maximus Mortgage

Get a mortgage with little money down

Jes — Thu, 03 Nov 2011 16:54:43 +0000

The prospect of buying a home is daunting, especially for the uninitiated. First-time homeowners often aren’t in the position to pay tens of thousands of dollars for a down payment, either. Luckily, options exist to help new buyers get mortgages without selling their organs to come up with the cash.

FHA loans

Insured by the Federal Housing Administration, these loans — known as FHA loans — only require a down payment of 3.5 percent along with mortgage insurance. A down payment of 3.5 percent is a lot more manageable to first-timers than the traditional 20 percent down. And if the home is in an affordable market, the down payment will be even lower.

Private mortgage insurance

Buyers can get a home with a lower down payment by purchasing private mortgage insurance, or PMI. There are several options for paying PMI with the home loan. It can be paid monthly, wrapped into the interest rate or financed directly into the loan.

No down payment loans

For a lucky few, mortgages that require no down payment can be had. Navy Federal Credit Union offers 100 percent financing on mortgages, but credit union eligibility is restricted to members of the military as well as some employees of the military and the Defense Department. The Department of Veterans Affairs offers no down payment loans to veterans who qualify. And the Department of Agriculture’s Rural Development program offers no down payment loans as an incentive for buyers to purchase a home in certain areas. You can find maps of eligible areas on the USDA website.

Personal financial planning

Other first-time homebuyers are able to get together a larger down payment by taking an honest look at their bills and finances and scrimping and saving, sometimes by making sacrifices.

4 Frequently Asked Mortgage Questions

Jes — Tue, 05 Jan 2010 14:32:41 +0000

There are many borrowers who land up in serious trouble due to ignorance and realize when things are beyond repair. This holds true not only in case of mortgages but debts, credit, your finances, investments in particular. Investment may also include buying your dream home. Homeowners also try to find ways to protect their homes from foreclosure. Some of the mortgage questions that borrowers seek answer to include the following –

1. Mortgage rate of interest –how it affects home buying?

One of the commonly asked mortgage questions include the mortgage rate of interest you choose prior to settling for a mortgage from a lender. Opting for fixed-rate mortgage will cause your monthly payments on mortgage to differ greatly as compared to payments you make for adjustable-rate mortgage.

In case of FRM, you have to make fixed mortgage payments every month throughout the term of the loan. If you choose adjustable-rate mortgage, you will have to make payments for your mortgage depending on the prevailing mortgage rates in the market.

2. How does term of the mortgage affect your repayment capacity?

Another mortgage question frequently asked by borrowers is about the loan term. If you are planning to repay your mortgage within 15 years, be prepared to pay more each month. However, the interest rate you have to shell out will be lower.

On the other hand, if you are planning to pay back your mortgage within 30 years, you will be required to pay less each month as mortgage payments but the interest rate will be high. So, depending on your mortgage requirement, you can choose the one that will serve your purpose.

3. What is mortgage loan modification and how does it help a homeowner?

Mortgage questions related to loan modification is common too. There are many who seek answers related to loan modification.

Loan modification is basically changing the terms of your existing mortgage so that the mortgage payments can be made affordable. When mortgage payments become affordable, chances of falling behind on payments get minimized and you can ward off foreclosure.

Loan modification can be done in the following 3 ways. Your mortgage lender will either change rate of interest from ARM to FRM, increase the term of the loan. Under certain circumstances, the lender may also reduce the principal balance of the loan.

4. Do all homeowners qualify for Obama’s mortgage bailout plan?

One of the commonly asked mortgage questions is related to Obama’s mortgage bailout program that was introduced as the Government’s effort to restore the mortgage market following mortgage subprime crisis. There are many related questions but the one that confused homeowners the most is about the eligibility criteria for availing these programs.

Obama’s mortgage bailout program that was introduced initially failed to address the needs of all homeowners. It could help eligible homeowners with primary mortgages only. Later the Obama administration introduced mortgage bailout plans to address needs of homeowners with secondary mortgages. However, the eligibility criteria for availing these programs were very rigid which failed to help many homeowners.

Whether you are buying a new home, refinancing your existing mortgage or applying for loan modification, it is important that you get correct answers to your mortgage questions that can guide you to use your hard earned cash judiciously.

A Bad Credit Home Loan Mortgage Is A Powerful Lending Tool For Increasing Your Credit Score

Jes — Tue, 17 Nov 2009 15:34:52 +0000

Many people find themselves trapped in the terrible cycle of bad credit. Because of their lower credit score, it becomes impossible to be approved for financing that has even decent terms and rates. Because of this, the only loans that are available to them carry monthly payments that are so high that it becomes increasingly difficult to properly manage these payments and their credit scores continue to drop.

However, in today’s lending world, there has been a shift in the way that a bad credit home mortgage loan works. Unlike the past, a mortgage now is not underwritten solely on the credit score of the borrower. The best available program for home mortgage refinance is the FHA program. This program does not take into account a borrower’s credit score, but instead factors in a borrower’s credit history.

These two things may sound like the same thing, but there is a crucial difference. Credit history, as defined by the FHA program is determined by a borrower’s last twelve-month’s worth of payment histories. Therefore, things like old collections and late payments form old loans are not taken into account.

An even more powerful change in the FHA lending guidelines from the lending guidelines of the old sub-prime and non-conforming lenders is the difference in mortgage rates. It used to be that a mortgage had its rate chosen based simply on the credit score of the borrower. The score itself was plugged into a matrix with scores and percentages being borrowed, and wherever the individual borrower landed on the matrix determined what their interest rate would be.

With the FHA program, the interest rate is the same for most borrowers, good credit, or bad. The burden is not on finding a good rate, but on actually convincing an underwriter that you are a good credit risk. If this can be done, a borrower will likely be approved for a thirty year fixed rate that is very competitive.

Because of this, FHA loans are a very useful tool to lower the interest rates on all of a bad credit borrower’s credit report. The FHA program allows a borrower to consolidate their debt for a total loan amount of up to 85 percent of their home’s value. This is incredibly useful for helping someone get out of the cycle of bad credit.

When a borrower starts looking at consolidating all of their credit cards within their new mortgage, overall monthly payments decrease dramatically. Most of the debt that a bad credit borrower is carrying will be things like high-risk credit cards and installment loans. These loans are notorious for having incredibly high interest rates. Taking ten to twenty thousand dollars worth of debt that carries interest rates above fifteen percent and consolidating it into a mortgage that carries an interest rate around six percent makes it possible for homeowners to save hundreds and hundreds of dollars off of their overall monthly debt.

Through proper use, and FHA debt consolidation loan is not just a way for bad credit borrowers to be approved for a mortgage. It is also a way for them to improve their credit score and make other types of financing available.

Due To Changes In The Mortgage Lending World, A Mortgage For People With Bad Credit Is Not Nearly As Available As It Once Was

Jes — Tue, 17 Nov 2009 15:19:31 +0000

Mortgage loans for people with bad credit are nothing like what they once were. The bad credit-lending world used to be a free for all, with little regulation and little uniformity. However, this has all changed.

At the peak of our economy’s last boom, bad credit lending was a very attractive industry for lenders to enter into. Regardless of credit score, a borrower had access to credit in many different forms. Credit cards, payday loans, and mortgages for people with bad credit were all showing huge rates of return for lenders.

It all started with the creation of software called Desktop Underwriter. This is an algorithm used to determine the credit-worthiness of a potential borrower. This program was created and used by Freddie Mac and Fannie Mae, and was implemented nationwide. If you applied for a conventional loan, no matter what bank you were at or where in the country you were, your file and unique circumstances were plugged into this algorithm and it spit out a decision on whether or not to lend to you.

This program was, and remains to be, a huge success. The power that this device offers conventional lending is that it can accurately predict the risk level of a certain type of loan. By using historic data on individual segments of the borrowing community, the program can determine the default rates for certain types of loans, and changes in the approval guidelines can be made instantly on a national level. Because of this, Conventional loans were sold on the secondary market as secured assets with measurable risk factors.

The accuracy of prediction for default rates made these incredibly lucrative investment vehicles. Loans that were similar to each other were packaged into large bonds and sold as secured investments, and everyone wanted a piece of them.

This success was enough to force other areas of lending to try the same thing. Therefore, large hedge funds began to buy the mortgage-backed securities that were not currently being sold by Freddie and Fannie. Mortgage companies for people with bad credit were finding that it did not seem to matter what the specifics of the loan they had sold were, it was still going to be very easy to sell it on the secondary market.

This, as we know now, is the major contributing factor the economic recession we are feeling today. Unlike the conventional loans that were closely monitored through Desktop Underwriter, these sub-prime loans were not governed by any major force, and were not at all uniform with each other. Therefore, the warehouse lines of mortgages that were sold were a hodgepodge of many different scenarios. It was just assumed that, because of the success of Freddie and Fannie’s loans, these would be the same, mainly because the housing market and the economy as a whole were so strong.

When these loans started to go into default, the shockwaves rippled through the entire industry. The sub-prime lenders were the first to go out of business, but certainly not the only ones to feel the pain of this. Everyone was hurt by it, from investors, to retirement account planners to municipalities.

With all of these companies gone from the market, the only option left is FHA mortgage financing. These loans are available for bad credit borrowers, but unlike the Wild West of lending that, we saw in the past, it would take a lot of hard work for a bad credit borrower to get an approval.

A Bad Credit Morgage Is Not As Rare As You May Think

Jes — Tue, 17 Nov 2009 15:03:21 +0000

A common misconception in today’s lending world is that there simply are no longer any programs available for someone to get a bad credit mortgage. It has become increasingly difficult to be approved for bad credit mortgage loans, but they are still in existence, and typically, will offer better interest rates than have ever been available before.

In the past, someone looking for a bad credit mortgage did not have to look very hard. At the height of the refinance boom of two years ago, there were literally thousands of lenders offering bad credit mortgages. Not only were there thousands of bad credit lenders, but each lender typically had hundreds of unique bat credit mortgage programs. Regardless of a borrower’s, credit score, or loan goals, likely a loan program was suited for this type of borrower.

There were no differences between purchase mortgages and refinance loans either. Even borrowers with sub 500 credit scores could be approved with limited documentation to purchase a home with little to no money down.

The problem, of course, was that a large percentage of these sub-prime and non-conforming loans ended up in foreclosure and an even larger number at least ended up in default. The banks were so accustomed to record mortgage profits for so long that they were completely unprepared for this eventuality. As fast as these bad credit lenders initially sprung up, they eventually fell.

So where does that leave someone with bad credit now? Now that there are no sub-prime or non-conforming lenders out there offering loans anymore, does that mean that there is no way for a bad credit borrower to get approved for a mortgage at all? The short answer is no.

The hole that these lenders left in the mortgage world was filled by the Federal Housing Administration. The US Department of Housing and Urban Development began offering FHA and VA loans to borrowers with bad credit, and started offering them at better terms than had been seen before for borrowers with less than perfect credit.

While there has been no return of the sub-prime and non-conforming lenders, the scope of the FHA program has continually expanded. There are no credit score limitations to the program and the interest rates are better than other financing options, even the ones available only to good credit borrowers. The main difference is that with an FHA loan, there is no change to the interest rate based on how much a person is borrowing. A borrower can borrow all the way up to 97% of their home’s value without being penalized on the interest rate. Conventional financing, even for borrowers with the best credit scores available tacks on hits to the interest rate depending on how high your loan amount is. Therefore, in today’s market, it is very possible for a borrower with a 550 credit score to obtain a better mortgage rate than a borrower with a 700 score who utilized Conventional financing.

Even with the decline of the mortgage-lending world, there is still a very strong option available for bad credit homeowners. The FHA program has made it possible for borrowers to still obtain the dream of owning a home.

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Bad Credit Mortgage Rates Are Better Than They Have Ever Been Before

Jes — Tue, 17 Nov 2009 14:58:13 +0000

Mortgage rates for bad credit used to be incredibly high. It was very easy to be approved for a bad credit home mortgage, but you still paid for it through a very high interest rate. However, as the mortgage market has changed, so has that of the bad credit mortgage market.

The mortgage crisis has had many effects on mortgage lenders and homeowners alike. What started with irresponsible sub-prime lending has had ripple effects across the economy and is now manifesting as record high unemployment rates, record decreases in home values, and record decrease in median home income. These factors have affected mortgage lenders and the mortgage-lending world as a whole as well.

The majority of the lenders that were offering to refinance bad credit loans have, for the most part, gone out of business. This means that fewer people with bad credit have been able to be approved to purchase new homes. The problem is that for the banks that are left, there are also fewer available customers.

The government, as well as the lending world has done everything in its power to make it easier for people to be approved for mortgage financing. It is still harder than it has ever been for a borrower with bad credit to be approved for financing. But, due largely to government backed programs like the Department of Housing and Urban Development’s Federal Housing Administration, when someone is approved for bad credit financing today, the mortgage rates are the most competitive they have ever been.

It is easy to see this. Go to any website that has a mortgage calculator and plug in some numbers. Take the average interest rate for someone with great credit from two years ago, which was seven percent and plug that in for a thirty year fixed rate. Then compare that payment to the payment of what even a bad credit borrower can be approved from now, through the FHA program at five and half percent. On a loan amount of 100,000 dollars, the difference is 99 dollars, down from 675 dollars a month to only 576.

The difference is that the majority of bad credit lending occurs today through the FHA program, as opposed to the sub-prime and non-conforming loans of the past. These sub-prime loans would approve almost anyone, but the interest rate was directly rated to how low your credit score was. Almost anyone would be approved, but almost no one would have an interest rate that was anywhere close to the average national rate for a thirty year fixed rate.

With the FHA program, again, almost any credit score can be approved, but unlike sub-prime loans, a borrower must go the extra mile to convince an underwriter that they are a good credit risk. If they can pull this off, they are rewarded with one of the most competitive interest rates available to anyone.

Today’s mortgage rates are better than they have ever been before. In addition, unlike the bad credit lending of the past, these rates apply to borrowers with less than perfect credit. Despite the extra work needed, these are definitely the best loans that have ever been for bad credit borrowers.

Bad Credit Home Mortgage Loans Are Not Yet A Thing Of The Past

Jes — Tue, 17 Nov 2009 14:52:07 +0000

It is a very common misconception that due to the mortgage crisis, it is no longer possible to obtain bad credit home mortgage loans. It is true that these loans are harder to be approved for than they have ever been. However, they are still around, and the market is, in fact, thriving.

There are a few things that you need to remember when looking to get a mortgage if you have bad credit. If you consider some useful tips, you will be able to put yourself in a position that will make it much easier for you to be approved once you have found the right lender.

The first thing that you need to remember is that it is important to shop around. When you have bad credit, it is tempting to just blindly accept the mortgage rate that is offered to you by the first lender that approves you for a home loan. Especially after shopping around and being denied by your local bank or other lenders, the first loan officer to offer you an approval for a refinance can seem like a godsend. But, it is important to realize that the chances are that the program that the loan officer has you approved for is going to available to other loan officers, some of whom may be charging less for the same mortgage.

Another thing to keep in mind is that a bad credit home mortgage and bad credit home equity lines work a lot differently than they used to. It used to be quite easy to be approved for any mortgage, if you were all right with paying a very high premium in terms of your interest rate, depending on just how bad your credit was. It does not work like that anymore. If you are approved for a bad credit mortgage, the chances are that you will still be offered a very competitive rate, regardless of your credit score. Nevertheless, in order to get this approval, you are going to have to be able to convince an underwriter that you are a good credit risk, despite your bad credit.

This is done by showing a pattern in the last twelve months of trying to turn around the negative items on your credit. The trick is to get your credit in order prior to even trying to be approved. Obviously, there are going to be some things that you cannot do anything about, but there are also going to be some things you can do to quickly help yourself out.

The first step is to call all of your credit card providers and ask for an increase. The credit score is partly determined by how much available credit you have. Therefore, if you can convince your credit card companies to increase your spending limit, your score will increase overnight.

The next thing to remember is that while paying off old collections will help you in the end, you need to make good decisions about which ones to pay off first. You cannot do this without first getting a copy of your credit report. You need to get online and find one of the sites that offer you a free credit report and take advantage of the offer.

Once you have gotten a copy off your report, look at the collections that are being reported. The idea is to make the last twelve months as clean as possible, so the only ones you need to be concerned with are the ones that were only recently opened. Make settlement offers on these, and then you are ready to apply.

If you follow these tips, you will soon be able to be approved for a mortgage refinance that will greatly improve your monthly housing payment.

It Is Still Possible To Obtain A Refinance Mortgage With Bad Credit

Jes — Fri, 13 Nov 2009 20:50:46 +0000

Getting a mortgage with bad credit is not as easy as it once was. During the height of the mortgage refinance boom, it was harder to find a borrower that could not be approved for a refinance than one that could. For every borrower out there, good credit and bad credit, there was a home loan program to fit him or her into.

However, with the mortgage crisis has come an end to creative financing. Loans that were once extremely easy to be approved are now completely impossible to obtain financing for anywhere. For instance, home equity loans used to be very approvable for almost all borrowers. For most refinance loans and purchase mortgages, a second mortgage or home equity line was simply added on to the loan as a second thought. Now, however, unless you have absolute tier one credit, it is highly unlikely that you will even be able to be approved for one.

Getting a mortgage loan with no money down was also quite easy. Even if you had no income and a very low credit score, it was likely that with the proper setup, a loan could be found to get you financed. The problem, of course, is that these were the first loans to start going default, and were the ones that did so at the highest rate.

The result was that most of the banks that were offering these mortgage programs have shied away from anything but good credit lending. These banks have simply seen too sharp of an increase in both mortgage defaults as well as foreclosures from people in these markets.

However, there is still one program that is lending to bad credit borrowers. The FHA program has filled the void that was left behind by sub-prime loans. These government insured loans are not driven by credit score, but more by the credit worthiness of the individual borrowers. This means that there are loan programs through the FHA that are available for a large number of bad credit borrowers, but unlike the loans of the past, it is the responsibility of the prospective borrower to prove to an underwriter that they are worth taking the risk of lending money for a mortgage to them.

An FHA home loan is not a completely worse program than the loans of the past, however. It is true that it takes considerably more work to get an underwriting approval. But, these approvals carry with them the best mortgage terms in the business. The mortgage rates are typically as good as, if not better than the rates being offered to tier one borrower at the local bank. In addition, unlike the sub-prime loans of the past, these are thirty year fixed rate loans, so there is no fear of your rate increasing later down the line.

While the lending world has changed, with a right attitude, and the right amount of work, a borrower with bad credit still has one good option available to them for mortgage financing.

Getting Mortgages With Bad Credit Is Harder Than It Once Was, But It Is Not Impossible

Jes — Fri, 13 Nov 2009 20:45:53 +0000

Mortgages for people with bad credit used to be very commonplace. There were mortgage programs available for almost every unique situation. A mortgage with bad credit could be obtained for the purpose of refinancing, purchasing, home equity loans, and even purchasing investment properties. However, getting a mortgage with bad credit is not as easy as it once was, and it is just not possible to obtain bad credit financing on many of the programs that you once could.

It used to be that every major bank, while focusing on good credit borrowers as its prime customer base, still had entire divisions devoted to targeting customers who had mortgages with bad credit. The success of these arms of the larger banks brought a completely new level of competition to the sub-prime lending world, as it opened the door for many smaller banks to open up those only target borrowers with bad credit.

These non-conforming and sub-prime lenders found huge levels of success, and the volume of mortgages for bad credit borrowers was massive. The problem was that the banks were caught up in the frenzy of this lending process, and were not watching as closely as they should have been the overall performance of this sector. The result was that an alarming number of these bad credit borrowers began to default on their loans. There were so many that defaulted, in fact, that the majority of these lenders ended up going out of business, and the larger banks all shut down there divisions that were targeting bad credit borrowers.

This does not mean that it is now impossible to obtain a refinance mortgage with bad credit. Mortgage refinance has just turned to a different avenue for borrowers with bad credit. Instead of having a large number of different options, a bad credit borrower really only has one: the FHA program.

The FHA program does not allow for many of the different options that were once there. A bad credit borrower cannot get a home equity loan, and they cannot be approved to purchase investment properties. However, the option to refinance to a much better interest rate is still there, and the FHA program is still offering consolidation loans.

These loans require much more documentation and more work than the sub-prime loans from before. It is going to be the responsibility of the borrower to prove to an underwriter that despite the bad credit, the borrower still has willingness to and is able to make consistent on-time payments.

This is sometimes a very difficult task, but is always going to be worth the effort. While a borrower cannot get financing for the unique scenarios, unlike the sub-prime loans of the past, if they are approved on the FHA program, the interest rate that they get will be a highly competitive one. In today’s market, the average difference between the interest rate of a local bank’s conventional loan and that of an FHA loan is typically less than .125 percent. Today’s bad credit mortgage is a much better vehicle for financing, although a harder one to be approved for.

It Is Not Impossible To Get A Mortgage With Bad Credit

Now Is The Time To Refinance Your Bad Credit Home Mortgage

Jes — Fri, 13 Nov 2009 20:25:13 +0000

Contrary to popular belief, it is still possible to be approved for a bad credit home mortgage refinance. In fact, this is one of the best times in history to look into getting a bad credit home loan mortgage.

First, it is important to remember going into any search for a bad credit home mortgage loan that the world of bad credit home mortgage loans is nothing like it used to be. You will not be walking into a scenario where you have numerous different lenders competing over you. You are not going to be able to choose from the unique lending options that used to exist, like 40-year mortgages and interest only loans. However, you will be able to get into a conservative 30-year fixed interest rate, and you will likely be able to do it at a lower rate than you have ever had on a mortgage before.

All of the lenders that specialized only in bad credit home mortgages are gone. Most of them went out of business, but the rest switched their focus away from sub-prime and non-conventional lending. The record high foreclosure rate was simply too much for these companies either to stay in business or to maintain operation with the same business practices.

Therefore, instead of being able to shop around from program to program, a borrower now is only going to be able to choose from one program for home mortgage with bad credit. This, however, is not necessarily a bad thing.

The only real lending institution that is still actively lending to bad credit borrowers is the FHA program. Just because there is only one option left, however, do not assume that it is a worse scenario for getting a home mortgage with bad credit.

The one area that the FHA loans are definitely worse than the sub-prime loans of old is in the underwriting. A borrower is not counted out of the program simply because they have bad credit, but in order to be approved they are going to have to work a lot harder than they used to. It is going to be the responsibility of the borrower to prove to an underwriter that despite the bad credit, they are still both willing and able to maintain a good payment history on the new mortgage, and this can sometimes be a difficult task that requires a lot of work.

The result of these FHA loans is decidedly worth the effort, though. Unlike the wide variety of bad credit loans from the past, these loans do not have many options to choose from, in terms of different loan programs. A borrower can choose mainly from two different terms of fixed rates: the fifteen-year and the thirty-year. This is actually a good thing, though. Instead of finding themselves in terrible mortgages, years from now, FHA borrowers will be in fixed rate loans with some of the lowest interest rates in the business.