30
Jun
By support
Home Mortgage Tips

Buying a New Home? 3 Tips for Being Approved for a Second Mortgage – and How to Manage It

Buying a New Home? 3 Tips for Being Approved for a Second Mortgage - and How to Manage It Applying for a second mortgage is a great way to keep your down payment amount to a minimum and to keep more of your cash in your bank account. It can also help you to avoid making PMI payments, and some lenders may even waive escrows for taxes and insurance if you use a second mortgage instead of a higher first loan amount. Whether you want to enjoy some or all of these benefits, you may be wondering what it takes to set up a second mortgage. With a focus on these tips, you can more easily get the financing structure that you desire.

Make Your Request Up-Front

Financial circumstances can change over the course of the loan process, but it is usually best to request a second loan up-front. A second mortgage will change how the first loan request is underwritten, and it may change the terms that you qualify for. In addition, there is often a different underwriting process for the second mortgage. By making both loan requests at the same time, you can save time and minimize the need to backtrack through underwriting.

Work With a Mortgage Broker

Some mortgage lenders will provide you with both a first and a second loan, but it is far more common for these two mortgages to come from different financial institutions. Some banks and direct lenders will only work with a handful of second loan companies, but a mortgage broker may be able to shop around to get the best overall deal on your second mortgage terms. Therefore, if you plan to apply for a second mortgage, there may be benefit with working with a mortgage broker.

Consider Paying Off Debts

You will need to qualify for both your first and second loans separately, but the payment for both will be considered during underwriting. If you have a high debt-to-income ratio, you may consider applying for a higher second mortgage to pay off some outstanding debt. You can work with your trusted lender or mortgage company to think creatively with regards to the best overall structure of your financing and to determine if any debts need to be paid off prior to or at closing.

A second mortgage provides you with many benefits when buying a home. Speak with your trusted loan officer or broker today regarding the options available for a second mortgage for your home buying plans.

23
Jun
By support
Home Mortgage Tips

Four Surefire Ways to Ensure That You Get the Best Possible Deal on Your Mortgage

Four Surefire Ways to Ensure That You Get the Best Possible Deal on Your Mortgage Taking time to set up your home mortgage is one of the best steps that you can take to promote financial health and security. The best home mortgage is one with an affordable payment, that does not empty your bank accounts of necessary financial reserves and that will help you to establish equity at a fast pace. If you want to ensure that you get the best deal on your mortgage focus on these tips.

Consider the Loan Term Carefully

The most common loan term options are a 15, 20 and 30 year term. There will be a slight interest rate difference between these options, but the term itself will play a critical role in how quickly your equity increases as well as what your mortgage payment is. The payment should be affordable, and you do not want to set up a payment that is so high that you run the risk of defaulting. However, a shorter term with a higher monthly payment can result in less interest charges and faster debt reduction.

Think About the Pros and Cons of a Larger Down Payment

The amount of your down payment is also critical to setting up the right mortgage. When you make a larger down payment, you will have lower payments and may even qualify for a better rate. However, you also may be tying up your extra funds that could be used for investments or for debt reduction into your mortgage.

Shop For the Best Interest Rate

The interest rate variation from lender to lender may be fairly minimal when factors like the down payment, the term and your credit rating are constant. However, even a quarter or a half-percent difference in the interest rate will impact your payment amount and equity growth significantly. It can also impact your interest charge for your annual tax deduction.

Review the Closing Costs

A final point to consider is the closing costs. Some lenders may take on a higher fee with closing costs in exchange for a lower interest rate. It is important that you consider the difference in the mortgage payment and equity growth over time. Think about how long it will take you to recoup the up-front cost differential with the monthly payment differential. This can help you to determine which loan option is the most affordable overall.

Many will pay attention to the interest rate and loan term when shopping for a new mortgage. These are important factors to consider, but they are not the only ones that are important and relevant. Keep each of these points in mind if you want to set up the best overall mortgage.

17
Jun
By support
Home Mortgage Tips

Suffering from Credit Problems? Three Ways You Can Patch Up Your Credit to Get a Mortgage Approved

Suffering from Credit Problems? Three Ways You Can Patch Up Your Credit to Get a Mortgage Approved Credit problems are unfortunately common, and they can make it difficult for you to obtain a mortgage. Even if you are able to obtain a mortgage with your credit issues, the rate may be rather high in comparison to what you may qualify for if you obtain a mortgage without fixing your credit problems. While some issues may take a while to fix, you may be able to see a decent increase in your credit rating when you follow a few easy steps.

Pay Off Outstanding Derogatory Credit Items

When you review a copy of your credit report, you may notice that some items have an outstanding balance due. If the account is in good standing, the outstanding balance is not a primary issue unless you have an excessive amount of debt. If the account is not in good standing, such as if you have a series of late payments or a collection account being reported on the credit report, you can see a boost in your credit rating when you pay off these debts.

Settle Judgments

Legal matters can also be reported on your credit report, and they may be settled or still outstanding. An example of this would be if an electrician serviced your home, and you did not pay the bill. The electrician could file a lien against you. A settled judgment may still be a ding on your credit rating, but it is far better than having an unsettled judgment. If you notice that you have a judgment reported on your credit report, you may consider taking the necessary steps to settle it and get back in good standing.

Pay Off Small Balances

If you can afford to do so, it can improve your credit rating to pay off small balances. A portion of your credit rating will be determined by the number of open accounts and the number of accounts with balances that you have. By focusing on the small balances, you can often see a quick improvement in your credit score. There may also be a benefit to closing these accounts after they have been paid off.

Before you apply for a mortgage, it is wise to request a copy of your credit report. You want to remove any items that you find on the report that do not belong to you. For those derogatory items that are yours, you can follow these steps to help improve your credit rating with fast results.