What You Must Know When Considering a Home Loan

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These days, as people scramble for new and more creative ways to finance buying a home, the interest only mortgage is becoming more common and well known. An interest only mortgage is one in which you have the option of paying only the interest (or just the interest and a portion of the principal) each month in the early years of the mortgage loan. Interest only periods may be applied to adjustabl... Read loans article



What You Must Know When Considering a Home Loan
Making the decision to become a homeowner is one of life's biggest decisions. Planning and preparation is the key to achieving the goal within the desired time frame. Being an active participant in the home loan process will make it easier for your dream to become a reality. Here are a few tips:

1. Educate yourself about the home loan process. Get an understanding of the role of each party involved. Explore your loan term options. Learn about the approval process. Find out about the time frame from start to finish and what could cause delays. Banks, brokers, and Realtors often host homebuyer's seminars and workshops to educate prospective buyers. Make arrangements to attend one.

2. Order a three bureau (Experian, Trans Union, and Equifax) credit report. Check for incorrect items, duplicate entries, previous addresses, employment information, and inquiries. A report may be obtained free annually or for a nominal fee with a credit report provider.

3. Resolve any credit issues that are currently outstanding. Make payment arrangements for delinquent accounts and/or collections. Your lender may require you to document the status (i.e., proof of keeping arrangements) as well as provide a written credit explanation. Send letters with supporting documentation to the credit bureau to have corrections made. If issues are resolved, be sure to document when and how it was resolved. If there are no credit issues, then you're one step ahead.

4. Plan for cash needed to cover down payment and closing costs. Set a realistic budget for your new purchase. Analyze your spending and cut back where possible. You will need to document the source of your down payment and closing costs funds. Inability to do so may result in the denial of your loan. In most cases, cash on hand is not acceptable. Lenders may also require that funds be seasoned (on deposit) for a specified period of time (i.e., 30, 60, or 90 days).

5. Be prepared to provide a lot of paperwork to document the information that appears on your loan application. It will be necessary to document your income, your assets, items that affect your credit rating, and other circumstances such as divorce or bankruptcy. Your loan officer will provide you with a checklist that lists the items that will initially be required for your loan file.

6. Be prepared to be actively involved in the process. Help your loan officer by providing as much information as possible about your situation. Withholding information could adversely affect your chances of approval. You may also be required to provide items that you must obtain from a third party. Make your best effort at providing the additional documentation in a timely fashion. Extended delays may cause your loan approval to expire. A new approval could result in less desirable loan terms (i.e., a higher interest rate or lower loan amount).

7. Don't make any significant purchases before or during your loan application submission. This could adversely affect your debt ratios and/or deplete the necessary cash reserves.

8. Stay positive. The process can be challenging but the reward is great. The better the pre-application preparation is, the easier (and shorter) the process will be for you.

Stephanie Graham is a mortgage professional with more than two decades of experience in both retail and wholesale lending. Stephanie has excelled in a number of positions including CRA officer, corporate trainer, consultant, and as an executive of Complete Mortgage Processing. More tips and techniques for mortgage processing and origination can be found at http://www.completemortgageprocessing.com

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Secured Loans - Get your Credit on Track

If you think your credit is beyond help, think again. Secured loans may very well be the answer to your credit problems. Consider how secured loans work and what it could mean for you as you reestablish your credit.

There are two basic kinds of loans - secured loans and unsecured loans. Most large loans are secured. Banks and lending institutions want to be sure their financial investment is protected. The best way to be sure that you'll repay the amount of the loan is to have the assurance that you're going to lose something if you don't - your house or car, for instance.

Unless you have awesome credit, you're probably going to have trouble getting an unsecured loan. But taking some steps toward a secured loan may very well entice lenders to grant you a loan, even if your credit history is less than perfect.

If your purpose is to reestablish credit, talk to your bank or lender about ways you can secure a small loan. You may be able to take out a small or moderate loan while leaving enough cash on deposit to cover the loan. Seem like a waste of time? It will give the bank the security they need to justify offering you the loan while giving you a chance to show your commitment to making payments on time. If you choose this route, remember that your role is to make payments on time, every time. If you keep your part of the deal, you'll have less trouble getting your next loan without going to those extremes to secure it.

Credit cards are nothing more than small loans that are paid off in monthly installments. Usually, credit card companies offer up credit cards and the card holder flashes the card to get instant credit. Secured credit cards are a good way to start getting your credit back on track.

This nothing more than a secured loan, only the security is cash. You deposit some amount of money with the card company. Then you can use that credit card, but only to that amount. You still make monthly payments and once you establish that you'll make payments on time, you have the option of renegotiating the terms.

Jeff Lakie is the founder of Secured Loan Resources a website providing information on Secured Loans


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What You Must Know When Considering a Home Loan
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