Bankruptcy – Can I Ever Buy A Home Again?

Check out our recent interview with Boston.com and real estate radio network host, Chris Devin. Nik Tsoukalis, President of Key Credit Repair discusses how someone may finance a home post personal bankruptcy. This is a MUST READ & WATCH!

Credit After Insolvency– Obtaining Authorized For A Home mortgage

After a past or current insolvency, many people want to hop on the road towards developing good credit report. To achieve this objective, some opt to buy a house. While a brand-new couch acquisition is an excellent way to restore credit and improve your credit history, acquiring a house after a recent bankruptcy could lead to greater rate of interest and fees.

Setting up Credit after Bankruptcy

An insolvency will remain on your credit rating record for 7 to ten years. During this moment, acquiring a brand-new house, automobile, or getting a charge card with a prime passion price will be complicated. You need to set up or rebuild your credit rating. When lenders evaluate your credit report application, your rating is a crucial identifying consider whether you are approved. If you have closed new charge account given that your insolvency, lending institutions can not precisely evaluate your creditworthiness.

There are several means to re-establish credit rating after a personal bankruptcy. If you can not get authorized for an unsecured credit report card, think about applying for a safeguarded card.

When Should You Obtain a Home Home mortgage Finance?

If possible, delay making an application for a new mortgage for anyway two years following your insolvency. This will certainly enable you sufficient time to rebuild your credit rating as well as increase your credit score. By doing this, you could qualify for much better or similar rates of interest.

Numerous lending institutions will approve a mortgage loan application eventually following a personal bankruptcy discharge. Sadly, the rate of interest on these finances are numerous points higher than present market rates. This rate increase will considerably increase your monthly mortgage settlement.

Ways to Get Approved for a Home Loan after Bankruptcy?

The good news is, it is feasible to obtain a home mortgage complying with a previous or recent bankruptcy. If you are obtaining a funding before re-establishing credit, call at least four sub prime lenders and get on-line quotes. While the prices you obtain will be high, you could consistently re-finance in 2 years for a much better price.

If you have developed brand-new credit accounts, regularly examine your credit rating record. Your credit report ranking will enhance substantially if you pay your creditors on time and stay away from late settlements. After two years, start getting in touch with home loan loan providers. Likewise, you must likewise get a number of quotes. To accelerate the procedure, apply through a home loan brokerage firm website. A single on-line application will generate a number of quotes from numerous various lending institutions.

After a current or past personal bankruptcy, many folks really want to obtain on the course towards establishing great credit rating. While a brand-new residence investment is a good means to restore credit and also enhance your credit score, purchasing a house after a recent bankruptcy might result in greater interest prices as well as charges.

Bankruptcy – Can I Ever Buy A Home Again?

An insolvency will remain on your credit guide for 7 to ten years. If you have not opened brand-new credit accounts given that your insolvency, loan providers could not precisely evaluate your creditworthiness.

If you have set up new credit report accounts, frequently inspect your credit guide.

Debt – Good vs Bad

We are accustomed to perceive of debt as 100 % derogatory. And also, it can make sense: all financial obligations, regardless of the kind, can be bad number in your possessions, lowering your family’s net worth. Yet, the comprehensive review is not that simple. Some forms after a while, will aid the stability, your possessions as well as your ability to earn money. A few typical kinds of financial obligation and their impact on your economic well-being.

Home loans

Without a mortgage, you are not able to actually take advantage of the real estate market. Mortgage is reasonably low-interest lending that can permit you to develop equity & your individual monetary declaration in time.

As your wide range increases, your monetary ability might increase too. With the majority of routine payments and also a normally cherishing real estate market, a residence can permit you to build a protected location to retire or a nest egg to make use of toward your retirement destination.

Of course, not every home mortgage situation is constructed alike. If you bought a couch throughout a time of high real estate prices or obtained a finance with a changeable rate of interest, you might end up with a property that deserves much less compared to you owe. Always study lasting fads and research your home loan contracts very carefully prior to you dedicate.

Sallie Mae Loans

It utilized to consistently be presumed that pupil financing were good debt due to the fact that they resulted in a greater paying occupation. But, enhancing education and learning costs and also transforming work markets mean that it should be participated in meticulously.

Study increasing fields to make sure that your degree will certainly result in the very best feasible job leads. In general, college grads gain greater than those that lack degrees. Yet, majors and the areas where you eventually prefer to live will identify exactly how important a student loan is as an investment in your future.

The “Worthless” Bank card Financial obligation

Vacations, clothes, precious jewelry as well as technical playthings is almost always an unfavorable. These things are almost never possessions that will expand in value. Whenever you would like to purchase something on credit, ask whether you have the money to pay the financial obligation off completely when your bank card declaration comes. If the solution is no, carefully take into consideration whether future you would certainly enjoy living with less money because you of today would like to splurge.

Car Lending

Automobile finances are another group of lending that, generally, will not assist you construct your net worth in time. However, there are a couple of various other factors to consider that can make them worth your while. If you live much from your task and also require an especially reliable auto, a car loan can be rewarding. It might enable you to get a newer model, which improves your job protection. Additionally, if you are in the procedure of rebuilding your credit rating, an installment financing could assist enhance your score. Simply make sure that you choose a funding with inexpensive settlements that has no charges for prepaying as well as will offer you the possibility to make adjustments as your credit report enhances as well as you increase your monetary worth.

While most of us can not live completely debt-free, there are significant distinctions between just what is considered “great” financial obligation as well as “bad” financial obligation. Though some financial obligation come under a bit of a dirty location, great financial obligation is merely specified as money obtained to spend for choices you really need or that value in worth, and also uncollectable bill is built up for products you simply really want and that usually drop in worth.

A write-off is a quantity owed by a company that is extremely unlikely to be paid due, for example, to a company entering into liquidation. There are numerous technological meanings of just what makes up a bad financial obligation, depending upon accounting conventions, governing procedure as well as the establishment provisioning. In the U.S.A, bank loans with more than ninety days’ defaults end up being “trouble financings”.

For more information about how charge offs can affect your credit score you can contact one of our team members. We would be happy to help you challenge those records that are no longer collectable per the FDCPA. The consumer has rights. But you must choose to exercise them.

Mortgage Loans – Top 10 Things You Didn’t Know

Mortgages are an almost inextricable part of the American dream. If you are going to own a home, it’s nearly impossible to do it without one. But, how much do you know about this American right of passage? Learn a little more about this very common commitment below:

One of the earliest mortgage agreements can be traced to ancient India, where a set of laws called the Code of Manu forbid deceptive lending.
Unfair debt practices have, it seems, always been part of the human experience. In Dante’s Inferno, a special circle of Hell (the seventh) was reserved for lenders who charged usurious rates or misled borrowers. Usury is specifically forbidden in both Biblical and Jewish Talmudic law.
Many scholars believe that the word mortgage comes from the old French terms mort and gage. This literally translates as “dead pledge.” The pledge would “live” until a debt had been paid in full or it had been determined that the borrower was unable to pay.
The modern mortgage did not come into being before the 1930s. Before that, homeownership was difficult and expensive. Most mortgages before then required a 50 percent down payment. Then, the buyer would make payments on the loan over a period of five years. At the end, the balance would be paid off in a massive balloon payment. This was out of many people’s reach, and only about 40% of Americans owned the homes they lived in.
In the US before the Great Depression, people with mortgages had to renegotiate their interest rates every year.
During the Depression, almost one in ten homes faced foreclosure. This rash of defaults on home loans only deepened the country’s instability and led to reforms in how loans could be written.
Modern mortgages were an innovation of the Federal Housing Administration. The FHA instituted policies where down payments only needed to be equal to 10 to 20 percent of the home’s value and buyers were judged on their ability to pay rather than having an in with a banker.
During the second World War, the GI Bill was amended to offer attractive loans to veterans. The terms included low interest rates and down payments as low as 5 percent. This stimulated the housing market and led to greater levels of home ownership.
Until the eighties, mortgages were all fixed-rate, with predictable payments. The adjustable rate mortgage (ARM) was introduced so buyers could be enticed with low introductory payments.
Over 35 percent of people who had ARMs before the housing crash of 2007 did not know whether their mortgage rates had a cap. This lack of knowledge caused a lot of sticker shock, with people having payments that sometimes doubled.

Mortgages are a tool that make home owner ship possible for hundreds of thousands of people. Be sure to learn the facts about your home loan to make the most of your home owner ship dreams.

Real Estate – The Real History

Ever pondered the history of real estate and home ownership? Over the course of human history, there have been a lot of changes in our ideas about the places where we lay our heads. A few of the highlights of real estate history:

All humans were nomads until somewhere between 30,000 and 15,000 BCE. What changed us? Agriculture. By having plants and livestock grow in a predictable, stable place, we were able to settle down and set roots.
During the next phase, most of the people of the world were renters. A leader, whether a tribal leader, a pharaoh or the head of a feudal family, owned the land and everyone else who lived on it paid for the privilege with a share of their harvest. This would last, for most, until the end of the age of the monarchs.
The rise of the merchant class during the Renaissance brought with it the idea that people had a right to own the property they lived on.
In the Colonial Era in America, Spain, France and England all laid claim to portions of North America. Deeds known as Land Warrants that entitled settlers to land here were distributed by land offices. Many were rewarded for military service with a plot of land under an arrangement known as a Bounty Land Warrant.
There are historians who argue that when Thomas Jefferson wrote the line in the US Constitution about “the pursuit of happiness,” a key concern of that happiness was the right to own property.
Homeownership became the cornerstone of the “American Dream” in the 50 years after the Civil War. As people left farms to seek their fortunes in the city, people saw owning homes as an increasingly important part in securing prosperity.
Franklin D. Roosevelt was a strong proponent of homeownership and many programs to help more people buy homes came to be under his leadership. He is quoted as saying “A nation of homeowners is unconquerable.”
Today, roughly two-thirds of all Americans own their homes. The numbers are higher in out in the country where nearly three-quarters of people own the homes they live in and much lower in urban areas where property is more expensive.
The desire to own homes is not universal. In Germany, despite the high per capita income, only 40% of people are homeowners. It’s not always to your benefit to own, either. Many analysts, for instance, say that someone is better off renting in a place like San Francisco than they are owning a home.
In the US, homeownership is correlated with a lot of benefits for the community. In places where there are high proportions of owner-occupied houses, children do better in school, property is better maintained and crime rates are lower. Owning a home is even correlated with better levels of health.

When you buy a home, you become part of a rich movement with a long history. Begin the work to repair your credit to regain access to this part of your American birthright.

Credit Scores – Here’s What Matters

Don’t become too fixated on your credit score. There are other factors that determine whether you qualify for the home loan that you are looking for.When you are trying to qualify for a home loan, it’s easy to get fixated on your credit score. A lot of people check it day after day, obsessing over every minute shift up or down. But, it’s important to keep your eye on the big picture and remember the other factors that determine whether or not you will qualify for the loan that you want.

Your Debt to Income Ratio

Even if your credit rating is high, if you have too much other debt, it can keep you from getting a loan. If you are on the hook for too much every month, lenders could decide that you are living too close to the edge. If you have the funds to do so, consider paying off installment loans and paying down credit cards to improve your debt to income ratio.

Your Payment History

Have you been late on a mortgage payment within the last year? That could disqualify you from getting a new loan. Lenders tend to hedge their bets and are often only willing to lend to those with a good recent history on their last mortgage.

Your Monthly Income

Creditors will look at how much you and your spouse earn every month when determining whether you qualify for a loan. In some cases, your income may not be deemed high enough to support the mortgage needed for the home value you want. You may need to look in a less expensive market or look for a smaller home.

Lenders also generally look only at income that is predictable going forward. Usually, this means that they will not consider bonuses or overtime pay. But, if you earn overtime every week or have dependably earned a regular bonus, you may be able to get a lender to consider this pay when deciding on your qualification for the loan.

Your Down Payment

Depending on what sort of mortgages you are looking at, you will need to have anywhere for 3% to as much as 20% for a down payment on the home. Some types of loans allow you to use money gifted from friends or family. Other require that you raise the money yourself.

If you had been considering making only the minimum down payment, find out if a larger one will help you qualify. You can also put extra money toward other closing expenses if you are close to qualifying.

Remember that every aspect of a home loan is negotiable. For instance, if the monthly payment on the loan would be a higher ratio of your income than is usually allowed, you can get limits extended by demonstrating that you have reliably made a rent payment that is even higher. Or, you can get lenders to work with you by giving a higher down payment. Don’t be afraid to ask your lender what you need to get the loan you want.

For more information about how credit score will effect your mortgage application Sign Up for $0 Today.

Is a VA Loan Right for You? – Q & A

At the end of World War II, the Servicemen’s Readjustment Act was passed to give returning veterans the financial support they needed to ease back into civilian life. One of the most important parts of the act was the VA loan program, which has made it possible for millions of veterans to become home owners.

VA Loan Perks

VA loans offer a number of unique benefits. These help veterans qualify for mortgages that they may not have on the regular market, and to get mortgages in areas where funding is hard to come by. Some perks provided by the loans:

There’s no need to take out private mortgage insurance on loans up to 103.15% on a first mortgage and 20% of the value of the house on a second one. This means that more of the monthly payment goes toward the principal, so, a larger loan is possible with the same payment per month.
While the maximum loan guarantee varies by county, a VA loan can be made with no down payment on mortgages up to $625,000. In certain high-cost areas, there are allowances for loans a little over a million.
Sellers are permitted to pay all of a veteran’s closing costs. This can be of great value to those who do not have the money up-front for those fees, which add up to thousands of dollars.
Veterans who receive at least 10% VA disability can have all funding fees waived. And, if a disability determination is in progress at the time of the loan, any fees can be refunded after the fact if the vet qualifies.
The loans can be used to build, buy or improve a home.

Who Qualifies

Since the program began, the VA has guaranteed over 20 million loans for veterans. The loans are granted to eligible military personnel, or their surviving spouses, as long as the spouse has not remarried. Some of the qualifications include:

Usually, a credit score of at least 620. While the VA itself has no credit score requirements, this is usually the minimum that the lender will allow.
Depending on the time of your service, you’ll have to meet certain active duty requirements. If you are currently on active duty, you’ll need 90 continuous days of service. If you are a veteran, you’ll need to have served your full active duty time and have an honorable discharge.
If you are a Reserve member or a member of the National Guard, you can qualify for a VA loan if you had 90 days of active service and spent at least six years in the National Guard or Selected Reserve.

Talk to lenders to find out if you are eligible for a VA loan. The many advantages of these loans can make all the difference in achieving your dreams of owning a home.

Reduced Documentations Loans – Are they back?

Here is some excellent news about a new reduced documentation loan offered by our friend at Guaranteed Rate Mortgage..Nikitas Kouimanis.

Out Line For The Reduced Doc Product Also Known As The Stated Income Mortgage Loan

For more information about reduced documenation loans you can inquire with:

Nikitas Kouimanis, Guaranteed Rate Mortgage

Email: Nikitas@guaranteedrate.com
The Reduced Doc Loan Program is for self-employed “business owners” only* buying or refinancing, including Cash-Out, their 1-4 family primary home or their one family or condo vacation home. Fixed, ARM or Interest only^^ products are available for this program. Debt to Income (DTI) should not exceed 38/44 with qualification based on using the fully amortized payment.
Maximum financing is:

All ARM Products
65LTV/CLTV up to $750,000 (1-4 Fam & Condo)
60LTV/CLTV from $750,100 to $1M (1-4 FAM & Condo)
50LTV/CLTV from $1,000,100 to $1.5MM (1-4 FAM & Condo)
50LTV/CLTV from $1,500,100 to $3M (1-2 FAM & Condo) All Fixed Rate Products 65LTV/CLTV up to $750,000 (1-4 FAM & Condo) 60LTV/CLTV from $750,100 to $1M (1-4 FAM & Condo) ^^2-4 family homes are excluded from the Interest Only products

INCOME
Borrower must provide proof (such as a CPA letter) that they are a self-employed owner in an established business for at least two full years and their credit will be a major factor in the approval process.** The DTI ratios should not exceed 36/44 on the RDLP program (on a fully amortized basis.) The borrower must be the owner of an established business entity that can be independently verified by a CPA or some other means. 1099 Independent Contractors do not qualify for this program and often work for one or more businesses but may not actually own the business. Landlords are usually not considered self-employed business owners for this program. All rental income must be verified by leases. The Reduced Doc Program may be combined with a borrower (including him/her) that has a salary or other verifiable form of income on the same application. The S/E borrower states their income confirms business ownership and verifies their liquid asset and reserves are commensurate with the income stated on the application. The salaried borrower lists and verifies their income by traditional means such as W-2’s and pay stubs. The LTV and rates are based on the Reduced Doc Program.
Note: Qualify all Amortized and Interest Only ARM Products at the higher of the actual product rate or the start rate for the NJ 10/1 Amortized ARM

ASSETS
On all purchases the borrower must have the down payment, the closing costs and 12 months PITI reserves in seasoned personal, business or retirement accounts at time of application.
On all refinances the borrower must have the closing costs and 12 months PITI reserves in seasoned personal, business or retirement accounts at time of application.
For all purchases a minimum 35% down payment is required. Liquid and near liquid assets seasoned for two months including reserves must be commensurate with the type of business the borrower owns and the income stated on the application. Assets must be in the applicant’s personal accounts or jointly with any co-borrower to be considered. Assets shared with other family members may not be considered.
Any liquid or near liquid assets used for the transaction should be seasoned and verified with the last two months statements in domestic accounts. Foreign asset accounts are not acceptable.
Proceeds from the sale of a departing residence or other real estate are acceptable for the down payment. However, the reserves requirements should be in personal seasoned liquid accounts.
The minimum reserves for all Reduced Doc owner-occupied purchase and refinance transactions must be at least 12 months PITI. A second home requires an additional three months for a total of 15 months PITI. A non-traditional second
home requires an additional 6 months PITI for a total of 18 Months PITI.
Business assets for the transaction and reserves are acceptable if the borrower is 100% owner of the business and their company’s accountant confirms that personal use of the business funds will not adversely affect the business operations. In addition if business liquid assets are used they should be seasoned the same as personal assets and close attention will still be on the borrower’s personal liquid asset positions.
Gifts, including gifts of equity and a refinance of recently inherited property are acceptable if the borrower has at least 35% of the purchase price or the value of the inherited property plus closing costs and the necessary reserves in personal seasoned liquid funds.

CREDIT
Personal credit use and history are very important. Over extended use of credit will be a concern.
Although FICO scores are not used to evaluate any loan applications, a very strong credit profile including a satisfactory
rental reference or mortgage payment history is required and will be an important factor in the analysis of the loan request.
A strong mortgage payment history means no late payments past the grace period, usually the 15th of the month. This is important. Copies of canceled mortgage payment checks or a detailed mortgage payment history from the lender showing no payments were made past the grace period or late fees paid may be required as documented proof.

A Stated Income Loan is a mortgage where the lender does not verify the borrower’s income by looking at their pay stubs, W-2 (employee income) forms, income tax returns, or other records. Instead, borrowers are simply asked to state their income, and taken at their word.
Reasons For Stated Income Loans

These loans are nominally intended for self-employed borrowers, or other borrowers who might have difficulty documenting their income. Stated income loans have been extended to customers with a wide range of credit histories, including subprime borrowers. The lack of verification makes these loans particularly simple targets for fraud.

Stated income loans fill a gap of situations which normal loan standards would not approve. For example, a standard rule is that a customer’s mortgage and other loan payments should take up no more than 45% of the person’s income. This would seem prudent for a person just owning their main home. However, a real estate investor may have multiple properties and for each may receive only a small amount more than their loan payments on each house, but end up with $200,000 in disposable income. Nevertheless, a non-stated income loan would decline this person since their debt to income ratio would not be in line. The same issue can arise with self-employed borrowers, where the bank with a fully documented loan would include the borrower’s business debt in their debt to income calculation. Stated income loans also help borrowers where fully documented loans normally would not consider the source of income as being reliable and stable, such as investors who consistently earn capital gains. Fully documented loans also do not consider potential future income increases. Another type of loan that uses the same principles is the no income disclosure loan.

In August 2006, Steven Krystofiak, president of the Mortgage Brokers Association for Responsible Lending, in a statement at a Federal Reserve hearing on mortgage regulation, reported that his organization had compared a sample of 100 stated income mortgage applications to IRS records, and found almost 60% of the sampled loans had overstated their income by more than 50 percent.

U.S… Senator Chuck Schumer is currently leading an effort to restrict stated income loan; his Borrowers Protection Act of 2007 would essentially forbid them. A few years later, Chuck Shumer’s efforts came to fruition with the Dodd-Frank Financial Reform Bill HR4173. Within the Bill, Section 1411 has the following excerpt, “A creditor making a residential mortgage loan shall verify amounts of income or assets that such creditor relies on to determine repayment ability…” Currently, lenders are conducting their own version of income and asset verification.

Stated Income Loans are still offered typically by small local banks. Qualification requirements are based on stable employment, good reserves, good FICO and no less than 35% equity position in the property. Stated income loan availability changes state to state, county to county.

They are specifically for Self-employed borrowers only. We do have an investor that will lend to w2 employees but you need to have 50% equity in the home and the maximum loan amount is 1 million. Otherwise this type of loan is the loan of choice for self-employed people. If you are self-employed, it may be difficult to document a regular income. You might make a great deal of money one month only to follow it up with nothing the next. With a traditional lender, it is hard to convince them that you are a good risk. For self-employed people, it represents an opportunity to own a house without getting a regular job.

The pros of this loan are that you have a quicker application process – The process of getting your money is usually faster with a stated income loan. When you apply for a regular loan, they have to review the loan as well as verify everything about it with your employer and document it. With a stated income loan, they can skip this step and get on to lending you the money you need.

Make your own decisions – With a traditional loan banks try to make your financial decisions for you. They have many complicated ratios and formulas that they use to justify a loan amount for you. For example, if you are buying a duplex, they will only let you count a portion of the projected rental income in your income. However, with a stated income loan, you don’t have to worry about whether or not the bank thinks you can afford it. You see the monthly payment and you decide whether or not you can afford it.

The cons of this loan are higher interest rates – As a result of the hassle-free level of faith in you, you will usually be charged a higher interest rate. They are taking a bigger risk by extending this type of loan to you. Therefore, they want to be well compensated for the risk that they are taking. This means more money coming out of your pocket each month and over the life of the loan.

Higher chance of default – While they do not like to admit it, sometimes the bank actually does know what they are doing in the approval process. They have many statistics to back up their decisions to lend or not. When you use a stated income loan, you are eliminating all of these built-in protection mechanisms. When you show them your income, debts, and credit score, they are basing their decision to lend on the history of others in your situation.