Tips For Getting A Low Mortgage Refinance Rate

If given the choice, every homeowner would happily choose a low mortgage rate. For those who find themselves having to refinance their home, lower rates can help out even more. There are many reasons homeowners may have to, or choose to, refinance their home. For example:

   * To help pay off debt.

   * To finance other investments, such as the purchase of more property or renovation costs.

   * To pay for children’s education or other large purchases.


Before you dive into hunting for the most competitive mortgage rates, it’s important you contact a mortgage professional to guide you along the way. A mortgage expert can help you plan and budget, and find the best loan for your needs and financial goals. Everyone’s needs are unique, and a mortgage expert will be able to give you personalized advice.

So, what is the best way to get a low mortgage rate? Here are some ideas!








    * Raise your credit score: Many lenders require a minimum credit score to even approve your mortgage, but if you have a higher credit score (higher than 740), then you are more likely to get lower refinance rates.

    * Be organized: To apply for refinancing, you will have to present your credit reports, as well as two years of tax returns, recent bank and investment statements, and pay stubs. Having all your financial documentation organized will ease the process of applying for refinancing.

    * Lower your debt-to-income ratio: In addition to helping raise your credit score, paying your bills and credit card balances on time will help you get debt under control. If your debt-to-income ratio is too high, you may face higher mortgage rates or be denied for refinancing.

    * Do your research: You can begin researching online even before you speak to a mortgage expert. Compare thoroughly the mortgage rates offered in order to find the lowest rate and the best loan program for you.

    * Choose the best loan term: Your loan term (for instance, 10,15, or 30 years) will determine the amount of your mortgage payments. Choosing a 30-year term will result in lower payments.

    * Budget: If you are refinancing, you will have to pay closing costs as well as any lender fees and other fees, including appraisal and legal advice. Make sure you budget for these costs while planning your refinance.

By researching mortgage experts and enlisting the help of one, you can refinance smoothly and find a low mortgage rate to help you pay off debt or purchase further investments!

source: northwoodmortgage.com

How To Secure A Mortgage When You’re Self-Employed

There are many advantages to being self-employed, but one disadvantage is that it is much more difficult to prove your income to financial institutions. It gets especially complicated when your income is much less on paper than it actually is— especially when you factor in the deductions made from business expenses. Recent rule changes have made it much more difficult for self-employed workers to qualify for a loan, but if you are self employed, there are ways to increase your chances of successfully securing a loan.

Have A Good Credit Score

Although it is not the only requirement for securing a mortgage, it is still critical. If you know your credit score is low, try to improve your score before approaching the bank, because it is one of the first things they will look at.

Keep Your Business Books

Keep track of your financial records. Practise good bookkeeping and keep your receipts handy. The lender will want to see the progress of the business over a period of time and ascertain its value. It is also important to show regular bank statements to show your income.

Be Prepared To Discuss Your Business

The lender will want to know the nature of your business—especially the financial aspect. Know the business’ income and expenses and how much it is worth or projected to be worth.

Write Off Fewer Expenses

While writing off as many expenses as possible has been the traditional way for business owners to lower their taxes, they may also end up qualifying for a smaller loan. Before you apply for a mortgage, reduce the number of expenses you write off. You may end up paying more in taxes but you will find it easier to secure a mortgage at the amount you want.

Pay Yourself A Salary

It might be easier to treat yourself as an employee in your own business and simply pay yourself a salary. The banks may be more inclined to treat you as a salaried employee rather than a business owner.

Being self-employed is quite rewarding, and with a little planning and forethought, it doesn’t have to inhibit you from accessing a mortgage. The more information you can provide to the lender about the finances and operations of your business, the easier it is to secure a mortgage that is right for you. At Northwood Mortgage, our specialists can help you as a self-employed person to secure the best available mortgages. Give us a call today and book a free consultation.

source: northwoodmortgage.com

Hurdles Towards Getting The Best Mortgage Rate

Even if you try hard to get the most attractive rate and term for a mortgage, you still might only end up with the most favorable option available for someone in your situation rather than with the best option available in the marketplace.

In fact, depending on various factors, the difference between your rate and a superior rate could be numerous percentage points.

Since even a single percentage point difference can make a difference over the long haul, it’s in your best interests to learn about the obstacles to getting the best mortgage rates. Read on for some tips that will help you get ahead.


Low Credit Score

If your credit score is south of 680, you’ll fall short of the threshold needed to secure the best interest rates available. It’ll be even worse if, in addition to a low credit score, you also lack the ability to come up with a substantial down payment. Having good credit though, won’t be enough. You’ll also need to demonstrate a 24-month period of good credit with zero major delinquencies.

Duration of Rate Hold

Since the general rule of thumb is that the lowest interest rates tend to be available for so-called quick closes, you will only be able to benefit from this general policy if you hold a rate for less than a month.

Modest Salary

When it comes to getting the best rates, your income will be a factor. If you’re your own boss or cannot easily provide proof of stable income over a number of years, you may very well miss out of the most attractive rates. In addition, some lenders will insist that you table a larger down payment.

Higher Risk Properties

Another factor that can impact your rate is the nature of the property you are interested in purchasing. For example, there are lenders that will assess higher rates for condo units, cottages, and big multi-unit residences since these sorts of living spaces are viewed by some lenders as higher risk, non-standard properties.

All in all, it is very much possible to get a compelling mortgage rate if you’re willing to do a bit of searching, but as you’ve seen from the aforementioned points, there are some hurdles towards getting the best mortgage rates. Consider the aforementioned points and compare them to your own situation to ascertain whether or not you’re likely to qualify for the best rates.

source: northwoodmortgage.com

Get a Free Credit Score From Your Bank

Big banks are jumping on the bandwagon to provide free credit scores to their customers. The majority are offering FICO scores, the most commonly used measure of creditworthiness among lenders. Citi­bank says that most of its consumer cardholders can now go online to see their FICO scores. Bank of America says it will provide FICO scores to its consumer card users later this year. Ally Financial is conducting a pilot program to supply FICO scores to its car-loan customers; a full launch is planned for this summer. Those three issuers join Barclaycard, Discover, Pentagon Federal Credit Union and Sallie Mae, which already offer FICO scores.

QUIZ: Will It Sink Your Credit Score?

 

Depending on your lender, you may be able to see your score on your monthly statement, by logging in to your account online, or by viewing it on a mobile app. Your lender may also include a 12-month history of your score and key factors affecting it. Keep in mind that the scale a lender uses to evaluate your credit profile may differ from the standard FICO range of 300 to 850. Citibank, for example, provides a score based on a scale of 250 to 900.

Not all of the free scores are FICO scores. USAA says that by summer it will provide all its credit card customers with their VantageScore—a score developed by the three major credit agencies (Equifax, Experian and TransUnion). Some sites, such as Mint.com, Credit.com and CreditKarma.com, will also show you free scores from the major credit agencies. Even when scores aren’t the same ones used by your lenders, they are useful indicators of your credit health. And don’t forget to check your credit report. You can get a free look once a year from each of the credit agencies at www.annualcreditreport.com.

source: kiplinger.com

Is There an Age Limit to Qualify for a Mortgage?

Many people are under the impression that once you reach a certain age, you won’t be able to qualify for a mortgage. Although there is some logic tied to that myth, it doesn’t make it true.

 In fact, as long as you’re a legal adult (over the age of 18), it’s illegal for a mortgage lender to decline you based on your age—regardless of being 21, 60, or 99-years-old, you can’t be denied a mortgage because of your age.

But this isn’t to say that mortgage lenders are obligated to offer you a loan. Even if you’re in the prime of your life, you’ll have to prove to your lender that you can afford your mortgage and that the odds of you going into foreclosure are slim.

Here are the factors that lenders do look at:

Debt to Income Ratios
Most lenders expect that your total monthly debts will equal no more than 36 percent of your gross income. This includes credit card payments, student loans, and of course, your estimated mortgage payments.

For this reason, it’s most beneficial to pay off the rest of your debts before you apply for a mortgage. It will greatly increase your chances of securing the mortgage you need.

Income

Mortgage lenders also want your mortgage to take less than 28 percent of your monthly income. In other words, the more money you’re bringing in per month—the more likely you are to get approved for a mortgage loan.

This is where age can make a difference. Not necessarily in terms of the chances of you getting a loan, but rather, when it comes to what income you’re including.

For most people between the ages of 20-50, the majority of their monthly income will come from their employee salary. On the flipside, many people retire in their 50s and 60s, after which their income will mainly be comprised of pension payments, high interest savings incomes, investment incomes, and other sources.

Credit Rate
No matter how old you are, the most important part of your mortgage payment is going to be your credit score. As is the case with any loan, the higher your credit score, the more credit you’ll be able to secure. Most mortgage lenders consider anything above around 740 to be a good credit score.

If you’re currently falling below that, try to increase your score as much as possible before applying for a loan. You can do this buy using credit, and making regular large payments to bring down your debt at a favorable rate.

source: northwoodmortgage.com

Refinancing Can Save You Money

It was not so very long ago that refinancing a mortgage was an easy decision. Rates were low and values seemed ready to rise forever. Millions of homeowners were cashing in on their growing equity, often walking away with a double win: lower monthly payments and a nice big check. It was the best of all possible real estate worlds.

The mortgage landscape has changed a great deal since those halcyon days, and today’s homeowner needs to look more carefully at the implications of refinancing an existing loan. There are still many reasons to refinance, but there are pitfalls to consider as well.





Good Reasons to Refinance

In almost every case, the best reason to refinance is to save money, and the simplest way to save is with a lower interest rate. If rates will be significantly lower on a new loan than they are on an existing loan, savings naturally follow. For example, a loan of $100,000 that carries an interest rate of 5 percent costs $5,000 in interest every year. If the rate can be reduced to 4 percent, that represents a saving of $1,000 annually.

Every prospective borrower does not get the same interest rate. Instead, the rate paid by a given borrower is customized according to that borrower’s specific circumstances. The biggest influence on the rate is the creditworthiness of the borrower. If your credit score has improved since you last took out a loan, there is a very good chance that you can get a lower rate now.

You may also be able to save because of changes in things you cannot control. If the amount of the loan was high when the property was purchased, that loan may have been categorized as a “jumbo” loan, a category that comes with higher rates. The cut-off for jumbo loans changes every year, though, and you may find that your loan amount no longer falls within jumbo parameters. In that case, it can make sense to investigate a conventional loan at a lower rate.

Saving money may be the single best reason to refinance, but not all refinances are motivated by savings. Borrowers often want to tap some of their home equity, whether to pay bills, finance an education, make improvements to the property or for any of a hundred reasons. This can be a perfectly valid choice, but borrowers should remember that they are using their homes as collateral and consider the risk involved.

Good Reasons to Think Twice

Regardless of interest rates or property values, borrowers should know that a refinance resets the mortgage clock. If an existing loan has a 30 year term, a new loan will start from scratch. If a loan has been outstanding for five years or more, the borrower is starting to see more principal included in each payment. With any new loan, the first few years are almost entirely devoted to interest payments.

The second issue to consider is whether the decrease in rate is enough to make the transaction worthwhile as a whole. Almost all loans have closing costs. If those costs are high, they can outweigh any savings that come from a lower interest rate.

The borrower’s plans play a part in the tradeoff between closing costs and rate. If Borrower A pays $5,000 in closing costs while saving $1,000 per year on monthly payments, he will not recoup those closing costs if he plans to sell the house next year. Borrower B, however, who plans to be in the home for the next 20 years, will see savings after the first five years and will save enough over the life of the loan to more than make up for the initial costs.

Private Mortgage Insurance (PMI) can also be a factor. PMI is a monthly cost that is typically applied to mortgages when the loan-to-value ratio exceeds 80 percent. A borrower may not have faced PMI when he purchased the property, but, if the house has lost value, PMI may suddenly be required.

Even if they can be approved for a mortgage, borrowers who have had recent credit issues may run into problems. Lenders save their lowest rates for their most creditworthy borrowers. Borrowers with credit issues often find themselves faced with higher rates when trying to refinance, a situation that is the reverse of the one facing borrowers who are refinancing with improved credit scores.

source: bripblap.com

How to Improve Credit Score

One of the most frustrating experiences is being turned down for a loan because of your credit score. Your ability to borrow money isn’t the only thing affected by your credit score, though. Insurers might use your credit score to determine your premiums.  A low score could mean that you pay more in premiums. Others, including Internet service providers and landlords, might be interested in your credit score as well. Knowing how to improve you credit score can help you save money in the long term.
Indeed, more and more, your credit score is being used to make judgments about your ability to handle your finances. If a low score seems to indicate that you are irresponsible, it will be difficult for you to take advantage of the best offers and loan terms in the world of finances. If you are wondering how to improve your credit score, here are some things you can do to boost your financial reputation:

Pay Down Some of Your Debt

One of the items that shows up on your credit report is how much debt you have. If you are using most of your available credit, it counts against your credit score. You can look as though you are in a better position by paying down some of your debt. Keep your credit card balances to less than 30% of your credit limits. This way, you’ll appear more able to handle the credit that you have.

Get Current on Your Bills

If you have fallen behind on some of your payments, catch up. Your credit report contains a record of each month’s payment history. When you are on time each month, it shows. When you miss a payment, your credit report reflects the number of days you are behind. If you have some accounts you are behind on, bring them up to date so that your on-time payments can begin overwhelming the negative items. The longer you go without missing a payment, the better off you’ll be — and the higher your credit score will be.
You should understand, though, that paying off a collection account won’t remove it from your credit report. It can remain on your account for years. It’s better, though, for the account to be shown as paid off, rather than still open.

Maintain Good Credit

Once you have managed to improve your credit score as much as you can, it’s up to you to maintain a good credit score. The truth is that excellent credit is achieved only after months — or years — of consistently credit-positive behaviors. One of the best ways to maintain good credit over time is to make on-time payments. Be sure to pay on time and in full each month. You can set up payment reminders, or have your bills automatically deducted from your account. That way, you don’t have to worry about paying late.
Also, be aware of the length of your credit history. Your credit score takes into account how long you have had credit, and how old your accounts are. Don’t close older accounts because that can reduce the length of your credit history — and drop your score. Be wary, too, of opening new accounts. Too many newer accounts can also damage your score. Be selective of the accounts that you open, and carefully consider which accounts to close.

Fix Errors on Your Credit Report

Your credit score is based on information reported in your credit file. In the U.S., you are entitled to one free credit report each year, from each of the major credit bureaus, by visiting www.annualcreditreport.com. You are also entitled to a free credit report whenever you are rejected for a loan based on information in the report. In Canada, you can write in to receive a free credit report by mail. And, of course, you can always pay a fee to access your credit file.

When you locate a mistake, go through the process of disputing the error so that it is fixed. When negative errors are repaired, your credit score often benefits.

With a little planning and responsible behavior, you can improve your credit score, and find a variety of opportunities opened up to you.

source: financialhighway.com

Things to Have Removed from your Credit Report

If you want to repair your credit quickly, there are a number of things that you can do to fix up your credit report. In general, there are some things on your credit report that really drag your credit score down. This is a look at the seven worst possible things that you can have on your credit score, as well as an explanation of why removing them will allow you to repair your credit quickly.

Most of us are already aware that some things on our credit reports are more dangerous than others. For example, going through a foreclosure or bankruptcy can cause your credit report to be scarred, and can force your credit score to plummet. Surprisingly, there are five other things that can have the same effect without you actually knowing it. Because lending institutions and banks that issue credit can use your credit score in order to evaluate who you are as a borrower, it is absolutely vital that you ensure that none of these entries ever appear in your credit report.

1 - Foreclosures.

While it may seem as if your world has literally crumbled all around you, there is still hope even when you are going default on your mortgage payment. When you do eventually default on your mortgage, most lenders are going to force you to give up possession of your home. Depending on your state laws, the lender may then auction your home off within a certain period of time in an attempt to recoup some of the lost costs. If there is any deficiency at all between what was owed to them and what your home is sold for, the lender can still come after you to reclaim those funds. With all of the foreclosure that is occurring right now, more and more banks are trying to come up with special arrangements in order to work with the homeowners. Even if you work out a deal with the lender and manage to keep your home, your credit score and credit report may still be scarred by the missed mortgage payments and the pre-foreclosure. Foreclosures remain on your credit report for seven years, so avoid them if you can.

2 - Debt Collections.

Attorney debt collections and ordinary debt collection companies can create a huge negative when they are listed on your credit report. The average credit score can drop by between 30 and 85 points for a single debt collection notice on a credit report. Sometimes you will take an even harder hit because the original credit will mark your account as a charge off, and then a second entry will appear for the collection agency, and this will only do more unnecessary and avoidable harm to your credit score.

source: richcreditdebtloan.com