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Bad Credit Home Mortgage Loan
Mortgages-before You Apply, Check Yourself Out
By Frank Bruno, Fri Dec 9th
You might have heard about the term "subprime mortgage." It's aterm that people throw around to describe lenders who approvethose with poor credit. Many people whose credit is less thanperfect automatically resign themselves to applying with thesesubprime mortgage companies. They think it's the only way to beable to get a mortgage approval. Before doing so, however, youmight want to think twice. It's true that subprime borrowers typically are people withchallenged credit. However, credit is not the only criterion tobe classified as subprime. Although guidelines will vary bylender, you might be a subprime borrower if: ˇYou have a foreclosure on your credit report. ˇYou filed forbankruptcy, and it has not been two years since it's beendischarged. ˇYou have excessive late payments (60 days to 120days and up). ˇYou're enrolled in CCCS or an equivalentnon-profit credit counseling service. ˇYour income is primarilypaid with cash or personal checks. ˇYou have very little equityin your home. ˇYou have a very high (above 40%) debt-to-incomeratio. ˇYou are self-employed and have sporadic ordifficult-to-verify income. ˇYour home values are extremely low(under $25,000). ˇYour credit score is below 620.
Notice that not every guideline is credit-related. A subprimeborrower can have absolutely perfect credit, but if he or sheworks as a housekeeper that is paid with cash, it's quitepossible that subprime guidelines would apply. Even if your situation matches one of the above, there is alwaysroom for interpretation. For example, you might have dischargedyour Chapter 7 Bankruptcy two years ago. IF you have at leastthree accounts on your credit report that you've been payingperfectly for the two years since your discharge, you mightqualify for a conventional mortgage. This is especially true ifyou've been paying your rent or mortgage on time, every time. How can you avoid having to apply with a subprime mortgagecompany? The very first step you MUST take is to obtain a copy of yourcredit report, along with your credit scores. Get a copy fromeach of the three major credit reporting bureaus: Equifax,Experian, and TransUnion. Each credit bureau maintains its ownprofile of your credit. They are completely independent of eachother, and they do not share or swap information amongthemselves. You will therefore find that your three creditscores will be different. Many mortgage companies, both subprime and conventional, willbase their lending decision on the middle of your three creditscores. For example, your scores might be 588, 612, and
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The nation's five largest mortgage servicers agreed to a settlement with 49 states over allegedly faulty foreclosure practices.
But Oklahoma Attorney General Scott Pruitt said concern that the national settlement overreached the power of state attorneys general was enough to avoid participating in the agreement.
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After falling to the lowest level on record, the 30-year fixed-rate mortgage maintained its record status this week.
But an analysis of Treasury market activity this week points to a 6-basis-point increase in rates by next week's report.
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The settlement with the Department of Housing and Urban Development is "the largest ever False Claims Act settlement relating to mortgage fraud," the Department of Justice said Thursday in a statement.
According to the announcement, the settlement resolves civil claims by the government that FHA lost hundreds of millions of dollars because of a mortgagee that had allegedly been "recklessly and fraudulently underwriting loans to unqualified borrowers."
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BofA insiders who requested anonymity have confirmed that a new reservation system is being implemented, though some bank customers aren't impacted by the move.
The system will help the lender grapple with strained capacity issues resulting from recent enhancements to the Home Affordable Refinance Program.
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The settlement was announced in a press conference Wednesday that included state and federal officials. Agreeing to the deal were Bank of America Corp, JPMorgan Chase & Co., Wells Fargo & Co., Citibank and Ally Financial.
The five companies were ranked as the biggest mortgage servicers in 2011 by Mortgage Daily.
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638.Your middle score is 612, as scored by TransUnion, for example.This is below the 620 score that many lenders use as a cutoff toqualify you for the preferred mortgage products. Now you mightbe wondering why you wouldn't meet that 620 guideline since oneof your scores is 638. In this case, because 638 is your highestscore, it is, in effect, disregarded. Now that you know that you need to raise that 612 to at least620, you can map out a strategy that focuses on your TransUnioncredit report. Although you should try to fix all three creditreports concurrently, your TransUnion report will likely get youabove 620 the fastest. It's not as important to try to raise the 638 (although youshould try anyway). Even if 638 skyrockets to 700, your middlescore will still be 612. Your individual situation will vary. Your middle credit scoremight be from any of the three credit reporting agencies, notjust TransUnion, so keep that in mind. Be aware that credit score is not the only thing you need toworry about. People have qualified for FHA mortgages with scoresas low as 580. You must look at the entirety of your situation,including income, assets, equity, job stability, etc. Just because you've had a late payment, a collection, or even abankruptcy on your record, do not automatically assume thatyou're a subprime borrower. Also, don't rely on the mortgagecompany to tell you whether you're a subprime borrower. Knowyour own credit situation first. You might just find yourselfqualifying for the very same mortgages as people with perfectcredit. About the author:Frank Bruno has spent the last 3 years assisting hundreds ofclients in saving thousands of dollars in Interest rates byteaching them unique techniques on how to quickly anddramatically raise their credit scores. For more informationplease visit his website- http://www.CreditScoreBooster.com |
