Good Credit Score for a Home Mortgage

Increasing Your Credit Score for a Home Mortgage

Common Hurdles for Closing on a New Home — April 26, 2015

Common Hurdles for Closing on a New Home

After weeks, or potentially months, of searching for a home, getting Your 650 Score, and negotiating with the seller, you’ve finally had your offer approved/accepted. While you may think the difficult part is over, you still have one more hurdle to navigate – the closing process. Throughout the following 30 days, if not longer, between the offer acceptance and the delivery of the home keys, there are several issues you must face. While the exact scenario you encounter may vary, the following hurdles are common throughout the American closing process. By preparing yourself for these hurdles and others like this you may face along the way, you’re better prepared to face this final challenge in securing your new home.

Hurdle #1 | Low Final Appraisal

While you’ve likely had the home appraised, before the closing can finalize, many banking institutions require a second appraisal. Should this appraised amount be too low, either the seller will have to lower the sales price or you’ll be required by law to pay for the difference in cash. This is essential for the mortgage lender as the appraised value must be high enough to recoup their losses should you enter foreclosure.

Hurdle #2 | Excessive Termite Damage

Generally, before the closing on a property can be completed, the home must be inspected for termites. In fact, this is generally required by your home lender to ensure the structure is sound before they place the final approval on your home loan. Even if your lender does not require a termite inspection, it’s best to have one done to ensure you don’t move into a home that’s in need of major repairs or complete reconstruction. If the problems are severe, and seller refuses to correct the problem, then you may be able to walk away from the agreement. Remember: make sure the purchase agreement features a clause stating if there is unforeseen damages the seller is unwilling to cover, you (the buyer) has the option to walk away without paying any fees.

Hurdle #3 | Unclean Property Title

Prior to closing on the home, you must hire a title company to investigate the history of the property title. Should the house title feature some type of legal claim, such as the IRS or the state, the title must be cleaned before the house can be legally transferred into your name. In some cases, this can prove detrimental to the selling/buying process. Make sure the purchase agreement features a clause stating you may walk away from the purchase should the title not be clean.

Hurdle #4 | The Home Doesn’t Qualify for Insurance

Should the previous homeowner filed a major claim against the home, such as serious mold problems or water damage, an insurance company may refuse to issue an insurance policy for the property. If this is the case, you’re legally barred from purchasing the home unless you pay for it in cash. This is because all mortgage lenders require some element of insurance over the property in order for the loan to be activated.

Five Steps to Obtain the Best Mortgage — April 8, 2015

Five Steps to Obtain the Best Mortgage

Whether you’re seeking to purchase a home for the first time or you wish to buy a second home, the most important step to take is to clear up your credit and remove all derogatory marks. After spending time cleaning up your credit (learn how at, comes the fun part. Although there are many different steps you can take to ensure the best mortgage for your unique situation, the following five steps are considered essential by industry expert. After reading this article you’ll have a solid understanding of what it takes to secure the best mortgage based upon your unique financial situation.

Step One | Determine Why You Need a Mortgage

While the goal for millions of Americans is to become a homeowner, the most important question to ask yourself is whether or not this is the best time in your life for such a financial commitment. If you’re buying a home for the first time, spend time reviewing special offers provided by most mortgage lenders. If you’re refinancing your home, then you should really spend time determining whether or not the extra time commitments and various fees outweigh your current interest rate.

Step Two | Mortgage Duration

Sit down and ask yourself, “How long do I want to pay on a home?” This among the most important questions to ask as it determines the overall cost of your loan. For example, if you’re not sure you want to live in a home for 15 to 30 years, then a traditional loan duration may not be your best bet. If you’re facing high interest rates, then a longer loan may result in paying tens of thousands of dollars in interest. It makes no sense to spend tens of thousands of dollars on a 30-year mortgage if you only end up living in the home for four years.

Step Three | Weight Your Financial Risks

If you are sure you wish to live in a home for several decades, then a traditional 15 or 30-year mortgage may be the ideal choice for you. However, there are various risks you must come to terms with. Perhaps the most important of these risks is determining the amount of interest you’ll pay over the life of a loan. If at the current time you only qualify for high-interest loans, then you’ll potentially pay tens of thousands of dollars over the life of the loan, which may result in dire consequences to your ability to save for retirement and emergencies.

Step Four | Select a Loan Provider Ideal for Your Current Situation

In most cases, if you have low credit score, but a decent financial history in terms of your debt-to-income ratio and outstanding debts, you may want to forgo conventional loans and look into lenders approved for FHA loans. In general, there are four types of mortgages ideal for almost all home buyers:

Government loans (FHA, VA and USDA)

  • Loan terms – 15, 30 or 40 year mortgage durations
  • Interest Rate – There are three types of interest rate plans: fixed-rate, adjustable-rate and hybrid loans, which feature a fixed rate for a specified duration then automatically transform into an adjustable rate for the remainder of the loan.
  • Interest-Only Loans – These loans require you to pay only the loan’s interest for the first several years, then you begin to pay off the principle balance.
Step Five | Compare Loan Quotes from Multiple Lenders

Perhaps the most important step in the quest for a home loan is to compare loan quotes from multiple lenders. Do not only review the quotes from two lenders, but rather, try to obtain pre-qualification quotes from at least five different lenders. Because of the competitive nature of this business, don’t be surprised to see a wide array of offers and loan terms; however, the lowest interest rate loan may not be your ideal choice. Make sure to read the fine print and fully understand your responsibilities before agreeing to a specific loan.