Do Cape Coral Mortgage Companies Allow Buying A Home With No Down-payment?

For first-time home buyers, a no down-payment mortgage is an attractive deal, especially if money is not available to consider a full down-payment. Most Cape Coral mortgage companies will offer such deals but they come with a caveat. This is why before you seal the deal, it is important that you determine whether or not a no down-payment mortgage is right for you. So when is this mortgage option suitable?

Timing is everything even in buying a home. Take advantage of seasons where sales are rising while supplies are dropping. In many neighborhoods and cities, prices start to increase. Even mortgage rates are lower compared to next year. If you choose 30-year loans, the monthly cost is considerably lower. The monthly payment is not usually the factor that deters buyers from investing in a property. It is usually the down-payment.

Most mortgage companies require buyers to put a 20% down-payment. While many home buyers have enough earnings, they have a few savings in the bank. This is where no down-payment mortgage programs come in. These programs allow you to buy a home without worrying about the required down-payment.

How does the no down-payment program work?

The housing market has changed over the years. If in the past you need to save a certain amount of money to qualify for a mortgage, home buyers now have the option to buy a home without the required 20% down-payment. While it can be a risky move considering the consequences that it entails, it is good for all the right reasons.

Avoid blowing your savings on mortgage payments

You still need to save money on emergency situations. While you may not ask for it, emergencies can happen. You need to prepare for these situations and the only way to do it is by making sure that you have enough money in the bank. Depleting your entire savings is not a good idea when taking out a mortgage loan. What if your roof collapsed? What if you suddenly become ill? Your savings can save you from these emergency situations. Being house-poor as what experts refer to it, is not a good thing. Although putting a 20% down-payment is considered as financially conservative, you can become financially broke if that is all that you have. Making a small down-payment is a financially conservative option.

You can buy a house with no down-payment required by applying for a no-money-down mortgage. A mortgage lender will educate you about the options that will work for you. You can even use  cash gifts as your down payment. Be sure that you follow the correct procedures or the cash gift will not be considered valid. Your lender will check if the cash gift is indeed a gift, not a loan in disguise. Cash gifts will not require home buyers repayment.

You can also take advantage of FHA down payment assistance program. This program is available to qualified home buyers in the U.S. Programs vary by state so you need to check for the options that your lender will consider you to be eligible. Grants are also available for home buyers. While it has been estimated that 87% of prospective buyers with single-family homes qualify for this type of grant, less than 10% of these buyers consider applying for such grants.

Like any mortgage loan program, it is imperative that you meet FHA loan requirements. First, you need to have a credit score of at least 500. You will also have to secure proof of income which needs to be verified using pay stubs or W-2 statements. It is important that you do not have any history of foreclosure, short sale, or bankruptcy within the year.

Putting more money down is still the best practice as it enables you to have a lower monthly mortgage payment. If the type of mortgage you have requires insurance, the more money you put as down will eventually cancel your mortgage insurance in a few years. Explore your options by talking to a mortgage specialist.

Mortgage Refinancing With Bad Credit: When Is The Right Time

Bad spending habits can take a toll on your credit score and subsequently, your mortgage refinancing. It may not matter now, but once you decide to take out a loan, your credit report will play a vital role in the chances of your loan application getting approved. Very rarely does a less-than-stellar score stand a chance of benefiting from low mortgage rates. While a credit score is going to be your prime factor in determining your terms and rates, you can still explore some options that will help you to get low mortgage rates. There is one thing you need to keep in mind though-timing is everything. Find out when it is a good idea to refinance your mortgage.

Reasons for mortgage refinancing

One of the top reasons homeowners choose to refinance mortgages is to reduce their interest rates so they can have lower interest costs. This is a suitable option if you have problems with your credit score since you will be not qualified for lower mortgage rates. When you refinance, you will also speed up your loan repayment. For instance, if you need to repay your loan in 20 years, it will be reduced to 15 years. Another reason you should refinance a mortgage is to change your adjustable-rate loan. Usually, it is converted to a fixed-rate loan. If you need money for covering repairs and other expenses, refinancing your loan is also a good idea. A refinance can lower your monthly payment and rate depending on your current score. It is important that you shop around before making that final decision.

Before you decide to refinance your mortgage, be sure that your requirements are ready. Prepare your debt-to-income requirement which varies depending on your lender and program. There are different loans that offer to refinance so you need to weigh your options carefully. You can also take several routes in refinancing your credit. If you have an existing FHA loan, you can consider FHA Streamline Refinance. Credits as low as 580 or even 500 depending on your lender can take advantage of this refinance program.

Best practices for lower-credit borrowers

Build up your savings account

If you have a good amount of savings, you will be able to demonstrate to lenders your ability to repay the money you owe. It is also an indicator of your financial safety net so you can avoid late payments.

Explore loan program options

There are loan programs you can consider where your credit scores do not matter. You can consider this alternative loan program if you need to refinance your mortgage.

Refinance with your lender

Discuss your options with your current mortgage lender. If you have stable employment, a qualifying DTI, and been making timely payments, your current lender might reconsider you for mortgage refinancing.

Things to keep in mind before refinancing with bad credit

Although a bad credit score does not limit your ability to refinance your mortgage, it still comes with a caveat. Since lower-credit borrowers pose increased risk to lenders, expect rates and fees to be higher which will deprive you of making potential savings. Refinancing your mortgage might be a good idea but you need to weigh the pros and cons. This option will only be beneficial if you have reached the break-even point.

Instead of exploring the mortgage refinancing option, consider improving your credit score by repaying some of your debts, minimizing credit card spending, settling overdue accounts and checking your credit report for any errors. With these practices, you will fix your credit score and explore better refinancing options in no time.

Securing Your First Mortgage: Expectations vs Reality

For first-time home-buyers, the thought of a mortgage or investing in a real estate property can bring mixed feelings of excitement and fear. Many feel overjoyed about owning a home, but the great feeling can turn into disappointments if expectations are far from reality. Even if you are buying a home for the first time, you should arm yourself with knowledge so you will know what to expect-from preparing the required documents up to purchasing a home. Everything must be properly set so you do not end up feeling disappointed.

Expectation #1: We have enough money for our down payment.

Every potential real estate buyer wants to make sure that they have saved enough to pay for the down payment. Unfortunately, things do not always seem to go as planned. Due to a lack of research and insufficient information, many home buyers are unable to pay for the down payment. Although you will only need to pay at least 5% of the purchase price, paying 20% or more of the total price prevents your property from being classified as a high-ratio mortgage. If you have your sights set on a real estate property, be sure that you have checked all the details including the amount required so you can secure the property.

Expectation #2: All we need is the down payment to own a home

Focusing on the down-payment alone can spell disaster because there are other costs that you have to be aware of when you decide to buy a home. Some of the costs associated with moving or buying a home include the property transfer fees, legal fees, appraisal fee, moving costs and the searches and title insurance. If you are going to factor these fees into the total costs, these will be approximately 2% of the purchase price.

Expectation #3:Home ownership is similar to renting a home.

The thought of owning a home can get anyone excited. However, not knowing the financial implication of the transition can hurt your pocket in the long run. When renting a home, you will only have to think about a few aspects such as utility costs and the rental fee itself. When you buy a home, you need to have money to cover extra fees for property taxes, insurance, extra utility costs and much more. Without analyzing your budget, you might bite off more than you can chew. Before you purchase a home, make sure that you check your budget because trying to stretch your money to pay for your mortgage can be quite stressful.

Expectation #4: We can spend the money we borrowed for purchasing a home

When you qualify for a loan, the first thing you will usually do is to determine the ideal amount of money you should spend on purchasing a home. While you can pick any price range depending on your preference, it is necessary that you choose an amount that will enable you to accommodate other expenses like upgrades, updates, and home renovations. When looking at homes, you should not only focus on aesthetics but on their practicality as well. If a property only requires a little more work, then you can decrease the amount of money you are going to borrow. Be open to more options as this technique can help you to save a good amount of money in the long run.

Knowing what you can expect from taking out a mortgage loan will help you to manage your finances. First-time home-buyers do not have to feel overwhelmed with the changes taking place in the mortgage industry. By obtaining the necessary information, you will be able to stay on top of these changes.

Mortgage Refinance Versus Purchase Mortgage: What Is The Difference?

A refinance and purchase mortgage without proper understanding can give you a hard time making the right choice. Educating yourself about these two options will help you make an informed decision. Refinance mortgage enables you to change your current mortgage rates. A purchase mortgage, on the other hand, refers to the initial funding you use to finance a home that you purchased.

Even if you do not have enough cash on hand, you can still be a homeowner with a purchase mortgage. The overall cost is one of the major differences between these two types of mortgages. Purchase mortgages have more ancillary fees. Thus, their interest rates are higher compared to refinance mortgages. This type of mortgage works for a first time homebuyer who does not yet have a home or mortgage. Keep in mind that these instances will cause the cost of a loan to increase.

When to consider refinancing your mortgage?

You can change the terms of your original mortgage with refinances. This option is advisable for the following reasons:

  • You want to reduce your monthly payment. To lower your monthly payment, you either need to switch from a higher interest rate or choose longer loan terms. With the use of a mortgage calculator, you will be able to determine your new monthly payment. You must take the total cost of your loan into consideration when you calculate the figure. Although you cannot guarantee savings with a lower monthly payment, you are still assured of flexibility when you choose to refinance your mortgage.
  • Your financial situation has improved. When you initially get your mortgage loan, you may not have established a satisfactory credit score yet. Once your credit score has improved, you can be eligible for lowering your interest rates. The change in rates will depend on your creditworthiness.
  • You are planning to fund a new project. A home equity loan is your ticket to financing a new project. Through your home equity loan, you can even take advantage of reduced interest rates. You can also change payoff terms so you will have more flexibility. Another way that you can use your home equity loan is when you want to consolidate debt.
  • Interest rates have lowered. Interest rates that have gone down can qualify for mortgage refinancing.

Is there a limit on refinancing your mortgage?

When it comes to refinancing a loan, the good news is that there is no limit. You have an option to refinance the same day you have closed your purchase mortgage. However, you should keep in mind that you must know the best time to refinance your mortgage. In refinancing your mortgage, your interest rate should drop by a minimum of 2%. Before you consider refinancing your mortgage, you need to know the break-even point and the time it will take for you to reduce your monthly payments. You can use a mortgage calculator to understand your monthly payment better. No two financial goals and situation are the same, so you need to assess your ability to pay back the loan you secured before making any changes.

If you cannot decide whether or not you should consider refinancing, working with a mortgage broker will put things in proper perspective. They can guide you in making better choices by laying down the pros and cons of refinancing your mortgage. Aside from being knowledgeable about refinancing, brokers can also assist you by matching you to a mortgage lender that suits your needs. Mortgage refinancing can help you improve your financial situation by reducing the burden of high-interest rates for many years to come.

Cape Coral Mortgage, Inc.
3512 Del Prado Blvd. S Ste106
Cape Coral, Fl. 33904
(239) 540 5555

5 Reasons Why Cape Coral Investment Is A Great Idea

Southwest Florida is a vacation haven that continues to be a crowd magnet every year. So if you are one of those with images of Florida beaches flashing through your mind, you are not alone. If you are dreaming of buying a property that is close to the picture-perfect attractions of this sunshine state, a Cape Coral investment should be number one on your list. At present, the estimated number of permanent residents in the city is around 180,000. Residents and visitors alike are captivated by over 400 miles of navigable canals, which gave rise to the moniker Waterfront Wonderland. Cape Coral is also a master-planned community so you can be sure that you are investing in a property that offers you value for money.

How about the housing market? Expect the Cape Coral market to be competitive with $228K median sale price as of last month. The prices have factored in the cost of living, which is more affordable than the neighboring cities. Southwest Florida is everyone’s dream base because it has lower taxes. Paying less taxes mean that you can enjoy a larger portion of your income and experience the best things in life. According to Zillow, Cape Coral’s median home value is currently at $227,500. Compared to the past year, the values have increased by 5.6%. Based on the real estate market prediction, the Cape Coral market will increase by 0.8%  in 2019. When it comes to the price per square foot, Cape Coral is relatively lower than the Fort Myers Metro average. The price per square foot in Cape Coral is at $151 while the Fort Myers Metro is at $160.

Why Cape Coral Investment Is A Good Idea?

Now you do not have to be too technical to understand why a Cape Coral investment is worth every penny. Here are practical reasons beyond the usual “friendly ambiance”, “awesome beaches”, and “great restaurants”.

1. Affordable

One factor that prospective buyer wants when searching for a real estate property is the cost of living. Cape Coral is a perfect option because based on national standards, the cost of living is undoubtedly affordable. If you are going to rent an apartment, the average price will be $1200 per month. If you choose a studio apartment, you can secure a cozy space at $750 a month. If you want a one-bedroom apartment, you can get one at $1000 per month. When compared to Miami, the median price of Cape Coral real estate properties are around $100K less. You will also have lower insurance costs because unlike the Atlantic coast; hurricanes do not always hit cape Coral.

2. Unbelievably Low Taxes

The best thing about Cape Coral is that it does not have a state income tax. If you decide to secure rental real estate and to hold them in a corporation, then the income taxes that you will need to pay will be much lower. When it comes to the property tax rate of Florida, its assessed value is usually at 1.1%. The national assessed value average is at 1.2%. Aside from the state income tax, you should also take the city and county property taxes into consideration. The estimated property tax rate of Cape Coral is almost $7 per $1000 per property value. The city is still in the process of reducing the property tax rate.

3. Landlord Friendly State

Another reason to like Cape Coral is that it does not have rent control. If you have given security deposit rates, the area does not provide limits on how high the rate can be. For overdue rental payment, you will only need to give the tenants three days’ notice to evict them. For intentionally damaged properties, a quit notice with a maximum period of 7 days will be given. The sanctions can be given to tenants who have committed repeated violations, but court proceedings are still part of the process. If you like the idea of investing in water property in Cape Coral, the fact that its landlord-friendly makes the area a good option.

4. Strong Real Estate Market

Due to the economic growth of Florida in general, you can expect the real estate market in Cape Coral to be strong right now. Each year, the state attracts residents from California, New York, and the Rust Belt due to a combination of high employment rates, decent cost of living and low tax rates. When it comes to property values, this area inevitably bounces back strong after periods where the real estate market is down. With this in mind, people who are interested in investing in Cape Coral can use this certain rebound as a great buying opportunity. Buying when the market is low almost always provides a surefire return on investment.

5. Growing Tourist Market

Tourists have always flocked to Cape Coral. Providing the opportunity to explore VRBO, AirBNB, or another form of vacation rental to the list of things you can do with your investment property. The area is also immensely popular for seasonal renters. For people who like to stay close to the ocean, the Cape Coral real estate market is an attractive prospect.

Cape Coral Mortgage, Inc.
3512 Del Prado Blvd. S Ste106
Cape Coral, Fl. 33904
(239) 540 5555

Reasons To Love Waterfront Houses In Cape Coral

When searching for a real estate investment that you want to turn into a peaceful base, waterfront houses will be an outstanding choice. Cape Coral, being surrounded by pristine beaches, is the best place to own a home on the water. There are good reasons why it is worth living in a waterfront house:

1. Higher value

Investing in waterfront properties is a wise move because of its resale value. If you decide to sell your property in the future, the fact that waterfront properties are sought after gives you an edge over other sellers. As compared to off-water homes, selling a house situated near any body of water gains more interested buyer.

2. Can keep family and friends entertained

Water provides a calming effect that fills your heart and mind with peace. A property near the beach, lake or any body of water does not only bring serenity but also looks more inviting to family and friends.

3. Provides water-based activities

Buying waterfront properties is like hitting two birds with one stone. You are not only making a great investment but also getting access to fun activities with your family. A waterfront property allows you to take part in fishing, swimming, boating, paddle boarding and kayaking anytime you want.

4. Relaxes your mind

Another reason to love waterfront houses is their ability to reduce stress. If you are tired of the hustle and bustle of the city, getting off the grid and communing with nature will help you relax. With a property that is closed to nature, you will be able to do the best things in life like catching a sunset or dipping your toes into the water.

5. Wildlife viewing

Southwest Florida is home to all kinds of attractions including wildlife where you will have a chance to have a close encounter with manatees, dolphins, tropical birds and different species of fish. You do not have to drive far when you own a property that gives you access to wildlife. The Gulf of Mexico, gulf access canal and freshwater lakes are also additional attractions you cannot afford to miss.

Important Considerations

As there are numerous benefits you can obtain from waterfront houses, you should also give importance to some rules and regulations that the property you are planning to purchase might have. Just like any type of property, you need to make sure that you are not violating any laws.

Flood Insurance

While owning a waterfront property is considered as a great investment, being situated in a flood-prone area makes the idea less appealing. Be sure that you secure insurance to protect your property. Be sure to choose properties with controlled water levels. There is also a way for you to check if you are in a flood risk area. You can go to this website to find out. Harsh weather can cause tsunamis and high tides. These natural calamities may damage your home due to floods. If you are unprepared, your investment can be reduced to rubble.

Shoreline permits

There are waterfront properties that extend into the water, and if yours have undergone improvements, you need to be aware of the regulations so you do not have to carry the consequences. Whether you build, rebuild, or repair your property and it results in extending it across the shoreline, you need to secure a permit. Most regulated areas will only allow the process if you adhere to the local guidelines, state’s regulations and the waterfront plan. Before you make improvements to the property, you need to consider three important factors:

  • Are the structures legally constructed?
  • Can you rebuild or repair them?
  • Can add or expand waterfront features?

The life expectancy of materials

You should be aware that the life expectancy of your home’s materials will also depend on your property’s location. If it is situated in saltwater locations, expect early signs of wear and tear on your waterfront features or the exterior of your home. Your roofs, fences, siding and other features that are exposed to the ocean or any saltwater body can wear down faster than those on off-water locations.

Elements like waves, storms, and wind can also damage your property, especially if it is near the water on a river or lake. You need to build physical obstructions so you can protect your home from these elements. Without protection, you need to replace the materials of your waterfront home more often than you should.

There is no doubt that waterfront property is a great investment. For you to make the most out of your home purchase transaction, you should seek guidance from an experienced home inspector or agent.

Cape Coral Mortgage, Inc.
3512 Del Prado Blvd. S Ste106
Cape Coral, Fl. 33904
(239) 540 5555

Bad Credit Score: How Soon Can You Secure A Mortgage Loan?

There’s a good reason why you need to be mindful of your spending habits. While occasional splurge is OK, not keeping track of your expenses and giving more importance to your wants than needs can wreak havoc on your finances. If you’re planning to secure a home or mortgage loan, may as well save up for the future or at least, take good care of your credit score.

How important is a good credit score? In the United States, it is a crucial determining factor in getting a mortgage. If you have bad credit, getting a loan can be a challenge. Instead of having a smooth journey into buying a home, the road can get steeper and steeper. There are practices to follow to raise your credit just in time to buy a house.

Getting a loan with bad credit

Understand your credit score

You will never know the importance of a good credit score unless you know exactly what it is. A credit score refers to the three-digit number which indicates your level of risk based on your financial history. Once you apply for a mortgage loan, the lender will check your credit score. The information appears on your credit report so if you have missed or late payments, this misstep will reflect on your credit score.

There are five aspects that can affect your credit score: length of history, payment history, credit mix, new credit, and debt-to-credit utilization.

Length of credit history: You can improve your credit score if you have a longer credit history. Lenders check the age of the applicant’s oldest account, the average age of all the accounts and the age of the newest account. Even if you have accounts with zero balances, it is still essential to keep all of them open.

Payment history: Making timely payments should be a habit because late payments can also impact your score. Delinquent payments of up to 30 days can cause your credit score to drop by as much as 110 points.

Credit mix: Having various types of credit accounts can help your score. These credit accounts may include installment loans, car loans, mortgage loans, credit cards, and retail accounts.

New credit: Avoid opening multiple accounts or applying for a new credit account as this can reduce your score by five points. This action can also result in lowering the average age of your credit account, which impacts the length of your credit history.

Debt-to-credit utilization ratio: This aspect refers to the amount of debt on your credit cards divided by your credit limit based on the sum of your credit card accounts. Prevent damaging your credit score by keeping the ratio around 30%. You can do this by avoiding maxing out your credit card every month.

It is important to note that your report may not show the actual credit score. You might need to get that separately.

What should be your ideal credit score?

Although 850 is the ideal credit score, only about 0.5% of consumers can attain this number based on a report from Fair Isaac Corporation. You are on the right track if your score is over 740. This can qualify you mortgages with best interest rates.

For scores that are in the 700s, you can still qualify for loans with reasonable interest rate. More often than not, lenders are looking for conventional loan applications with a minimum credit score of 620. However, if you want a decent interest rate, you should aim for a 660 credit score and steer clear of applying for additional loans to maintain your score.

Establishing a credit history

With raising your credit score, understanding the importance of the length of your credit history is also essential. There are many ways that you can qualify for a mortgage if you have not established credit at the age of 20.

Building your credit history is necessary for making yourself credible. So long as you have a good track record by paying debts in a timely manner and ensuring that you are not falling behind bills payments, these are great indicators that you are a responsible credit user. You can also build a credit history by taking out a credit-building loan.

Explore your options

There are various types of mortgages that can assist individuals who have lower credit scores apply for a home loan. Federal Housing Administration (FHA) for instance, provide applicants with the lowest credit score requirements. This is usually around 580 to qualify for 3.5% downpayment.

Ways to boost your credit score before securing a home loan

While a lower credit score can give you a hard time applying for a mortgage, it does not mean there is no other way to address your financial habits. If you intend to buy a home, now is the time to improve your credit.

  • Ensure timely bills payment-Paying your bills on time is the easiest technique to improve your score. You can start by creating a budget that works for you as part of changing your spending habits. You can also talk to a financial planner to design a budget that will keep your finances intact.
  • Get rid of credit card debt-A debt-to-credit utilization ratio, as a rule of thumb, should not be over 30%. Raise your credit score b paying down existing debt. You can also consider requesting a credit line from your card issuer as this can also lower your debt-to-credit utilization ratio. You can submit your request online or make a phone call.

Check credit report for errors

Make it a habit to secure a free copy of your credit report once every 12 months so you can review it for errors. Your chances of getting your mortgage loan approved may be slim due to errors on your credit report. The bank might have mixed up your accounts or someone shares the same name as you. By checking your report for any errors, you will be able to eliminate any inconveniences associated with having a low credit score due to inaccurate information.

Getting rid of negative marks from your credit report

If there are no errors and you are the one responsible for your low credit score due to a missed payment, you need to call your creditor and request for deletion. Keep in mind that this technique will not work if you have been known for being a habitual late payer. The request will only be granted if you’re a one-time offender. It is important that you are a loyal customer so you can make this request.

Once the creditor agrees to your request for deletion, a letter will be sent to the credit bureaus to request for the removal of the negative information from your credit report. It is your responsibility to collect all the documents like your letter of deletion or a new credit card statement, that will serve as proof that the changes have already been made. You also need to ask your mortgage lender to update your score, the process is known as a rapid rescore. It involves updating your score in a matter of days. This process is a huge help, especially when buying a home.

Seek help from a credit counseling agency

Another way that you can fix your credit score is by talking to a credit counselor. This is a good move if you find yourself falling behind on your credit card payments. The counselor will create a plan so you can make payments to your creditors without suffering from big interest rates. The debt-management company, on the other hand, will help you to negotiate with your creditors to lower the amount of money you owe. It is important to note that these companies also have large fees for such services. Assess your situation before seeking help from these companies.

Understand the interest rates you will obtain with your low credit score

Having a low credit score means that your options are limited. Before you apply for a mortgage loan, discuss your options with a lender. You also need to know the rate your credit score will qualify for. There are different factors that determine your interest rate. It does not only depend on your credit score. Being mindful of your spending habit can make the home buying process smoother and stress-free.

Cape Coral Mortgage, Inc.
3512 Del Prado Blvd. S Ste106
Cape Coral, Fl. 33904
(239) 540 5555

Understanding a Portfolio Mortgage Loan

For people who are looking for a mortgage for a home but cannot obtain traditional financing, there are a few options outside the traditional realm of mortgages where borrowers can still obtain mortgage financing. One of those options is known as a portfolio mortgage or a portfolio loan. Unlike a traditional mortgage lender, a portfolio mortgage lender is usually a smaller lender, bank or mortgage company that will continue to manage and hold a mortgage after the initial mortgage is commenced.

Understanding Long Term Mortgage Basics

Many borrowers are unfamiliar with how traditional mortgages work after they complete the closing on their home. This can be especially true with first time home buyers. Most mortgages today are sold after the home purchase is completed to a large mortgage company and management firm. These mortgages are sold into what is called the “secondary mortgage market”.

The new buyer of the mortgage is the company that will manage the mortgage long term. Many borrowers become uncertain after their first home purchase when they realize their payments start to go to another company after the first six months. This is very common and happens when the primary mortgage sells in the secondary mortgage market to another company. The new company will usually hold the mortgage for the life of the loan but could resell it down the road.

To be eligible for selling on the secondary market, almost all primary mortgages have a list of guidelines that must be met. By contrast, a portfolio lender holds a loan in house and continues to manage the mortgage loan long term. This allows the lender to have more flexibility in the types of people they approve for a home loan.

Portfolio mortgages are a great option for people who have a few glitches on their credit history but are qualified buyers in every other capacity. Some of the primary reasons people choose to use a portfolio lender for a mortgage are people who:

  • Have Credit History Glitches
  • Self-Employed Borrowers
  • Have Little Credit History
  • Are Looking for a Short-Term Mortgage
  • Are Buyers Looking to Buy, Remodel and Flip a Home
  • Have Some Type of Tax Lien
  • Need a Second Home Mortgage
  • Have Income Verification Concerns
  • Have Employment History Glitches Barring Them from Traditional Mortgage Approval
  • Currently have Higher Income to Debt Ratios
  • Are Buying a Home That Needs Extensive Repairs
  • Have High Student Loan Debt
  • Have Old Debt or Old Bankruptcies

In each of these cases, the borrower may not be able to acquire a standard home mortgage. However, these people are capable of making the necessary mortgage payments on the home they wish to buy. Portfolio lenders treat each portfolio loan application on an individual basis and make an approval after considering many factors.

Basic Facts for Portfolio Mortgages

Portfolio mortgages require a 10-25% down payment to be approved. Some of the down payment money can come from a gift. Mortgage interest rates for portfolio mortgages are higher than traditional mortgages because the risk of default is higher for portfolio loans.

A portfolio mortgage loan is a good borrowing option for people who are buying a home that generally could not be approved for traditional financing. This may be because the house has needed repairs, or the borrowers are in the process of rebuilding their credit but their credit score is insufficient for a traditional loan. In many cases, these borrowers have the necessary capital to purchase the home but have other mitigating factors that impede a traditional mortgage approval process.

Top Reasons Your Mortgage Could Get Rejected

Anyone who has bought a home will agree that the most challenging part of becoming a homeowner is getting your mortgage application approved. There is a series of processes that you need to undergo-from securing essential documents to passing the lender evaluation. All of these steps are not easy to accomplish. Every year, millions of individuals are applying for mortgages, but not everyone gets to complete the process.

While it is true that applying for a mortgage loan is not a walk in the park, getting your loan approved is not elusive either. There are good reasons your mortgage application can get rejected. You will need to review your application to increase the chances of loan approval. You also have to be aware of the reasons your applications can get rejected to avoid mistakes in the future:

Low Credit Score

If your parents used to tell you to spend your money wisely, they were actually right. An occasional splurge is fine but when it becomes a daily habit, you will soon find yourself in a cesspool of debt. Bad spending habits make it difficult for you to take out any type of loan. Why? Lenders will review your credit score to gauge your ability to repay them. Sure, some lending firms will approve your loan despite your bad credit history. Although, you have to shoulder the skyrocketing interest rates.

Before you consider unnecessary loans, think of its impact on your future endeavor. You can maintain a good credit score if you avoid using credit cards if you cannot afford them. If you have outstanding balances, be sure to pay them in full before your due date. Your bad spending habits are recorded in your credit history. If you have credit card payment delinquencies,  you can reduce your chances of getting your mortgage application approved.

Insufficient Down Payment

Your down payment is crucial in securing a mortgage. On average, mortgages will require you to prepare 5% to 25% of the overall value of the property you are planning to buy. Although you can still make an arrangement for another person to co-sign your mortgage, once you fall behind your payments, the co-signee will be compelled to pay. The best way to address this problem is to delay your application until you have saved enough money to pay the amount required.

Bankruptcy and Debt Issues

Aside from checking your credit history, your mortgage lender will also verify if you have an outstanding debt or declarations of bankruptcy. Your credit history will include positive and negative information like debts and bankruptcies. A bad credit score stays on your history for years. Be sure that you keep your payments up to date. If you have received notices of debt collection, this information can reflect on your credit history for more than seven years. Do not let your spending habits ruin your credit report. Make debt payments a top priority if you intend to apply for a mortgage loan.

What Happens After The Lender Rejects Your Mortgage Application

The first thing you need to do once you find out that your application was rejected is to accept the lender’s decision. You will also have to know the reason your application got rejected. You should be aware that it will take time before your mortgage application will become approved. So while waiting, you need to get your credit reports, avoid applying for new credit card, be cautious of co-signing and do not close old credit card accounts. By improving your borrowing behavior and spending habits, you will be able to have better chances of getting an approval from the lender.

Cape Coral Mortgage, Inc.
3512 Del Prado Blvd. S Ste106
Cape Coral, Fl. 33904
(239) 540 5555

When Is The Best Time To Apply For A Mortgage Loan?

When it comes to applying for a mortgage loan, timing is everything. The best time will depend on market conditions. So if your timing is right, you’ll be able to get lower mortgage rates. However, the process is easier said than done. This is why you need to gain a better understanding of the mortgage industry so you can predict the right time to take out a loan. What are these driving forces that cause mortgage rates to increase? How will you know your timing is right?

Understanding the mortgage business cycle

Lenders have business cycles that borrowers need to understand. The beginning of the month is intended for acquiring and setting up new mortgage loans. The middle of the month is dedicated to gathering documents and preparing loans for month-end. The end of the month is when lenders ensure they get as many loans closed or approved as possible.

When should be the time to start the loan application process?

The rule of thumb is within the first few business days of the month. Why? This is when lenders are searching for new business. Because they are done with transactions from last month, they’re looking for new applications to start the next month. If you’re a keen observer, you’ll know how eager loan officers are to review your loan options or return your phone calls. They’re willing to set an appointment with you to discuss the terms.

Avoid applying for a mortgage loan the last week of the month. This is the time when loan applications are in full swing. Although many lenders would like to consider new applications, full schedules with closing loans will cause them to let new loans fall to the wayside. While a mortgage officer is happy to take your application, it won’t be getting much-needed attention because they need to fulfill an existing pipeline. Chances are, you’ll get vague excuses as to why your application isn’t prospering and this will lead you to believe that you’re not the number one priority of the lender.

Mortgage loan expectations

If the first few days of the month are the best times to apply, should you be discouraged to apply late in the month? Not necessarily. You need to set your expectations, making sure that you are aware of the processing times. You can also improve your refinance experience when you organize everything. If the lender asks you to submit your financial documents, be sure they’re at your fingertips.

You should also try your best to submit a complete application. While it’s not a guarantee that your application will be processed faster, there’s a greater chance that you’ll not encounter problems. You also need to provide detailed explanation and information about your financial histories such as low credit score or employment gaps.

Expect delays as they are beyond your control. Once you have all the necessary documents ready, there’s nothing for you to worry about. By following the standard protocol set by lenders, you’ll be able to increase the possibility of mortgage loan approval.

Cape Coral Mortgage, Inc.
3512 Del Prado Blvd. S Ste106
Cape Coral, Fl. 33904
(239) 540 5555