F.A.Q.’s

Mortgages offered to people with a bad credit rating typically have a higher interest rate and are a variable (versus) fixed rate. This means that the interest rate can change with the market.

The first step is to learn more about how to improve your credit score.

The second step is to find out what loans are available for those with a lower credit score. For a borrower with a credit score that is less than 620, a subprime mortgage loan is your most likely option. If you have a bad credit score but are confident that you can make a monthly payment without going into default, this type of mortgage could be a good option to consider.

For further information click Bad Credit.

Congratulations on your decision to buy a home! Here are some steps you can take to get started:

1. Determine your budget: Before you start looking at homes, it’s important to have a good idea of how much you can afford to spend. This will help you narrow down your search and make it easier to find a home that fits your budget.
2. Get pre-approved for a mortgage: It’s a good idea to get pre-approved for a mortgage before you start looking at homes. This will give you a better idea of how much you can borrow, and will also make you a more competitive buyer when you find a home you want to make an offer on.
3. Find a real estate agent: Choose whether or not you want to hire a real estate agent to help you find the home that you want.
4. Start looking at homes: Once you have a good idea of your budget and have been pre-approved for a mortgage, you can start looking at homes that are for sale in your price range.
5. Make an offer: When you find a home you want to buy, your real estate agent can help you make an offer and negotiate the terms of the sale.
6. Get a home inspection: Before you finalize the purchase of your home, it’s a good idea to have it inspected by a professional home inspector to identify any potential problems.
7. Close the sale: Once all of the details have been finalized and the home inspection has been completed, you can close the sale and become the owner of your new home.
8. For first time buyers, I would suggest reading FHA for more information about buying your own home and what to expect.

It’s best to talk to us directly to have a better understanding on how you’re going to purchase or sell your own home, or if you have any other further questions you may want to ask.

Location: 15851 Dallas Pkwy, Ste 600 Addison, Texas 75001
Contact us: 877-948-2562
Email: mark@signaturelendingservices.com

Or click here.

It does help to get a more competitive mortgage interest rate if you have good credit. It isn’t a requirement though to have perfect or an outstanding credit score. If you have a pretty low credit score, or have filed for bankruptcy in the past, you always have a chance in working towards improving your credit. There’s always room for improvement.

If you are having doubts, just contact your loan officer. Don’t be intimidated just because you have a credit score that’s not the best. It is advised to check on your credit report yearly to monitor your financial status which is definitely important when it comes to purchasing a home. You can check on any problems if there are any that pop up on your report.

Reference:
No Income Verification Loans.
Credit Repair
Seller Assisted Mortgages

It is generally not advisable to buy a new home while you are still in the process of selling your current home, because it can be financially risky. If your current home does not sell as quickly as you had anticipated, you may end up having to make mortgage payments on two homes at the same time, which can be very difficult to afford. In addition, if the sale of your current home falls through for any reason, you may be left with two homes and no way to pay for them. It is generally a better idea to wait until your current home is sold before making the decision to buy a new one.

It is also possible to consider selling your current home while financing a new one, there are a few things you should keep in mind:

1. Consider your financing options: You may be able to secure a bridge loan or a home equity loan to help you finance the purchase of your new home while you are still in the process of selling your current home.
2. Plan for contingencies: Make sure you have a plan in place in case your current home does not sell as quickly as you had hoped. This may involve renting out your current home or negotiating a lease-back agreement with the buyer.
3. Consider the timing: It is generally a good idea to try to coordinate the closing dates of your current home and your new home as closely as possible to minimize the amount of time you are paying for two mortgages.
4. Work with a real estate agent: An experienced real estate agent can help you navigate the process of selling your current home and buying a new one, and can provide valuable advice and guidance.
5. Be prepared for a potentially hectic time: Buying and selling a home at the same time can be stressful, so it is important to stay organized and be prepared for a potentially hectic period.

Before you start spending on furniture for your future home, it’s better to see the kind of qualifications you need to purchase a home. Contact a loan officer to check on your credit report to verify your assets and income. He/She could also help you get a complete written credit approval, subject to an appraisal. This is before you make an offer on a house.

What are the differences between the word prequalified and the word preapproved?

The word prequalified, you’ve given the basic information they will need to assist you in determining what kind of program that you qualify for, and also find something that you can afford.

The word preapproved, the lender has already collected all the important documents and verified every information that you have provided to move forward with the loan and finally get an approval.

Going back to getting prequalification though, it can be easily done online and here are the next steps that you will need to do.

• Tax returns and W-2 forms from the most recent two years.
• Bank/asset statements from the most recent two months.
• Paystubs from the last 30 days.
• Valid photo ID.

(Please take note, when you do have all the documentations you need, you have no obligations to accept the terms and conditions of the mortgage being offered to you, nor do you need to provide them with these documents to receive a Loan Estimate(LE).

Income and debt ratios are financial measures used by lenders to evaluate your ability to repay a mortgage.
The debt-to-income ratio (DTI) is a measure of how much of your monthly income is spent on debt payments, including your mortgage, credit card payments, and other debts. Lenders typically look for a DTI of 43% or less when evaluating a mortgage application.

The front-end ratio, also known as the housing ratio, is a measure of how much of your monthly income is spent on your mortgage payment. Lenders typically look for a front-end ratio of 28% or less when evaluating a mortgage application.

The back-end ratio, also known as the total debt ratio, is a measure of how much of your monthly income is spent on all of your debt payments, including your mortgage, credit card payments, and other debts. Lenders typically look for a back-end ratio of 36% or less when evaluating a mortgage application.

Lenders use these ratios to determine whether you have enough income to afford the mortgage payments and still have enough left over to cover your other expenses. If your ratios are too high, it may be difficult for you to qualify for a mortgage.

For more information here’s a guide to What’s Good and How to Calculate Debt-to-Income Ratio (DTI)

Here are some things you should avoid doing before you get prequalified for a home loan:

1. Don’t apply for new credit or loans: This could affect your credit score and debt-to-income ratio, which are important factors lenders consider when evaluating your mortgage application.
2. Don’t change jobs: Lenders like to see stability in employment, so switching jobs before you apply for a mortgage could be a red flag.
3. Don’t make large purchases: Buying a car or expensive appliance on credit could affect your debt-to-income ratio, so it’s best to hold off until after you’ve been prequalified.
4. Don’t close credit card accounts: Closing credit card accounts can lower your credit score, which is something you want to avoid before you apply for a mortgage.
5. Don’t co-sign for anyone: Co-sign for someone else’s loan could put your own credit at risk, which is something you want to avoid before you apply for a mortgage.

By following these tips, you can help ensure that you are in the best position possible to get prequalified for a home loan.

Once you have been prequalified for a home loan, here are some things you can do to increase your chances of getting approved for a mortgage:

1. Review your application letter: Your prequalification letter should outline the terms of the loan you have been prequalified for, including the loan amount, interest rate, and monthly payments. Make sure you understand these terms and that you are comfortable with the payment amount.
2. Shop around for mortgage rates:Prequalification gives you an idea of how much you can borrow, but it is not a guarantee of a loan. It’s a good idea to shop around and compare mortgage rates from multiple lenders to ensure you are getting the best deal.
3. Gather necessary documents:When you are ready to apply for a mortgage, you will need to provide a variety of documents, such as pay stubs, tax returns, and bank statements. Start gathering these documents now so that you are ready to submit a complete application. Better be prepared and check the documents needed when applying for a home loan to ensure a hassle-free transaction.
4. Work on improving your credit score: A higher credit score can help you qualify for a lower mortgage rate, so it’s a good idea to work on improving your credit score if it is not already high. Pay your bills on time, pay down debt, and consider disputing any errors on your credit report. If you have a bad credit score, learn how credit repair works.
5. Get preapproved: Prequalification is a good first step, but getting pre-approved for a mortgage is even better. Preapproval means that a lender has reviewed your financial information in detail and is willing to give you a mortgage subject to certain conditions. This can make you a more competitive buyer in a hot real estate market.

Mortgage insurance is a type of insurance that protects lenders against the risk of default on home loans. It is often required by lenders when the borrower makes a down payment that is less than 20% of the home’s purchase price. Mortgage insurance can be either private or public, and it typically requires the borrower to pay a premium as part of the mortgage payment. The premium is usually added to the borrower’s monthly payment and is used to cover the cost of the insurance. If the borrower defaults on the loan, the mortgage insurance provider will compensate the lender for some or all of the loss. Learn more about what mortgage insurance is and how it works.

When you apply for a mortgage, the lender will typically consider several factors in order to determine your creditworthiness, including your employment history, income, debt-to-income ratio, and credit score. If you have recently started a new job, this may be taken into account as part of the lender’s evaluation process.

In general, lenders prefer to see a stable employment history and may be more cautious about approving a mortgage for someone who has recently started a new job. However, this does not necessarily mean that you will not be able to get a mortgage. It is important to provide the lender with as much information as possible about your new job, including the nature of your employment, your salary, and any benefits or bonuses that you may be receiving. If you are able to demonstrate that your new job is stable and that you have a strong financial profile, you may still be able to qualify for a mortgage. 

Also check:
Seller Assisted Mortgages

APR stands for Annual Percentage Rate. It is a measure of the cost of credit, expressed as a yearly interest rate. The APR includes the interest rate and any other fees or costs associated with the loans, such as points, origination fees, and closing costs. The APR is designed to give borrowers a more accurate representation of the true cost of a loan by taking these fees and costs into account.

For example, if you are considering taking out a mortgage, the APR will take into account not only the interest rate on the loan, but also any points, origination fees, and closing costs that may be required to pay. This can help you to better compare the costs of different loan offers and make a more informed decision about which loan is right for you.

It’s important to note that the APR is not the same as the interest rate on a loan. The interest rate is the amount of interest that you will be charged on the balance of your loan, while the APR is a broader measure of the total cost of the loan.

This is also called discount points, and it works as a one-time fee to pay if you would like to get the lower interest rate. One mortgage point is equivalent to 1% of your total amount of loan value and it may drop your interest rate one-eighth to one-quarter percent lower.
Lenders will charge their own fees as you may have noticed by now, which can vary depending on the person. One lender may waive a fee but add on another, and another lender may quote some interest rate before even adding or subtracting discount points that may change the total cost of a mortgage. It is important to get a clear understanding of what the lender wants.

You may hear a lender mention the term “adding points”. To get a lower interest rate, lenders will put mortgage points that are fees that charges on your loan in exchange for it. In doing this, it is also called “buying down the rate”.

Closing costs are the fees that a lender charges you to borrow money and are payable at the end of the home purchase transaction. This may vary depending on the type of loan, property, and location you get. The extra costs paid may include fees for the attorney, prepaid interest, insurance, documentation, and more. This can be broken down in your Closing Disclosure that is provided by your loan officer at least three days prior to closing date. At this time, you might want to compare the final closing costs to your initial estimate to make sure there are no big discrepancies. You can always ask for an updated estimate since the amount can change as the loan process continues.

The buyers may also ask a seller for some closing cost assistance as part of your offer on the house. It also helps to do some homework before closing day just so you don’t feel like you’re unprepared. You should be reviewing your closing disclosure that you received three days prior to the closing date. Double check for the charges and compare it to your Loan Estimate. Any inconsistencies should be cleared up with your lender.