4 Reasons Why You Should Get Pre-Approved for a Mortgage

The first thing to do before deciding on whether or not to buy a home is to set aside a budget., however, trying to set up a budget by yourself can prove to be a very taxing and difficult task. The amount of debt your holding, your down payment amount, your credit score, as well as your job history are all factors that you need to take into consideration before creating a budget for your new home. As such, it is highly recommended that you consult with a qualified lender in order to be pre-approved for a mortgage. Then and only then should you set-up a consultation with a real estate broker.

Getting pre-approved for a mortgage can be used to your advantage in a financial situation. Below are 4 reasons why you should get pre-approved for a mortgage, and how doing so can be leveraged to your benefit.

Boost Your Credibility

Getting pre-approved for a mortgage demonstrates to all the parties involved that you are not only committed to buying a home but are also capable of doing so. Most sellers don’t want to deal with uncertainty before they sell their home, and you can showcase your seriousness about the transaction by getting pre-approved for a mortgage. In fact, your offer may directly depend on getting a mortgage approved, and the lack of assurance can cause trepidation in the seller’s mind; they may worry that the deal will fall through, wasting their time and effort.

As a result, some buyers will only work with people who have been pre-approved for a mortgage so that they have some peace of mind. For instance, in the event a seller has multiple prospective buyers, the chances that you will be their choice will go up exponentially if you’ve been pre-approved, as it will significantly boost your credibility and reliability as well.

Helps Your Realtor Work More Effectively For You

Nothing defines a budget more effectively than being pre-approved for a mortgage. Your agent will now have all the tools and information needed to help you buy the home of your dreams. Having that precious intel will allow them to focus your search far more efficiently. You can prioritize according to your budgetary restrictions, and also go through your wish list by clearly identifying your needs and preferences. What’s more, your real estate agent will use the information you’ve provided to hone in on specific neighbourhoods, getting you the home of your dreams quicker than you can say, ‘pre-approved mortgage’.

Being pre-approved also means your agent can use that information to negotiate a better deal for you. The leverage that a pre-approval can provide should never be underestimated, nor should the competitive advantage that it provides prospective buyers over their non-approved counterparts. Think of a pre-approved mortgage as a bargaining chip that your agent can use to help you get the best possible price or value for your hard-earned dollar, as the seller will know that the offer on the table is solid.

Enjoy Peace of Mind

By having complete control over your finances you will avoid the ambiguity that often comes with a new home purchase. The lender should outline all of the clandestine costs that you may not have been aware of prior to purchase and should explain what you can and can’t afford so that you don’t suffer financially in the long run. A pre-approved mortgage means you don’t need to worry about accidentally overextending your finances or any fees getting overlooked in the process.

The last thing you want to do is make an offer on a home that you simply cannot afford, either now or long term. Applying for a mortgage — any type of mortgage — can be arduous and stressful. Getting pre-approved takes care of matters up front, and having your finances in check allows you to go through the transaction with both control and confidence.

Smart Business Sense

Believe it or not, getting pre-approved for a loan is a fairly easy process. You don’t need to worry about paying any fees either. You can have the peace of mind that there is no obligation on your part even in the event that you are pre-approved for the mortgage. In other words, there is no pressure or costs to worry about, so why not see if you qualify? There is literally nothing to lose other than a few moments of your time, and being pre-approved can be the difference between owning the home of your dreams and settling for mediocrity.

You can also use the opportunity to speak to a financial advisor. They will address any fears or concerns you may have, and help you make sound financial decisions right from the get-go. In fact, they will help custom tailor a solution that caters to your unique needs, your future plans, your current budget, as well as your future earning potential. With so many advantages and no real drawbacks, it just makes smart business sense to consult with a financial advisor to determine if you qualify for a pre-approved mortgage.

When Playtime is Over

Shopping online for your fantasy home can be a fun experience, but when you are actually serious about turning your dreams into a reality, then getting pre-approved for a mortgage can help create a solid foundation before you take the final step and become a homeowner.

For more more information about getting pre-approved for a mortgage, call Northwood Mortgage on +1 (888) 495-4825 or contact us here.

source: northwoodmortgage.com

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

Ways A Second Mortgage Can Help Your Financial Situation

Life happens – and there are things that may crop up that may put a serious damper on your financial situation. Owning your home can help mitigate these problems through the use of a second mortgage.

 Consolidating debt, for most people, is a reality in this economic climate. Homeowners with at least 20 per cent equity in their homes can apply for a second mortgage, which is a great way of working away at reducing your debt. It’s also an option when you need extra cash for things like medical expenses or renovations.

Do I qualify?
The interest rates on second mortgages are often higher than first mortgages, yet carry lower interest rates than credit cards. If you pay other debts on time and choose to get a second mortgage, you may find your credit score improving, a definite bonus!

Here are a few things lenders will look for in those who apply for second mortgages:

    Income. Are you gainfully employed? Or have a consistent source of income? Lenders will want proof that you’ll be able to make payments
    Equity. The more you have invested in your home, the better. A larger down payment for those buying a home is also a plus. The less risk a lender has to take, the better for you
    Credit score. A higher score equals lower interest rates
    The property. The investment needs to be secured by the lender if you are unable to make mortgage payments

The good and the not so good

On the plus side:


    Your first mortgage doesn’t need to be discharged, so you’ll have no penalties or fees
    Most carry a term of one year with only interest payments
    There are many choices of lending institutions, so financing can be more easily arranged
    If you’ve got a mortgage and a positive credit history, chances are you’ll be an ideal candidate
    You can use up to 80 per cent of your home’s value to arrange for the mortgage.

On the not-so-plus side:

    You’ll face higher interest rates
    Second mortgages may carry longer terms but repayment may be required sooner depending upon the terms of the loan
    There is a possibility of default, in which case the second lender has the option of purchasing the home


If you’re thinking a second mortgage may be an option for you, speak to the experts at Northwood Mortgage about your situation. Schedule an appointment and have all your questions answered.

source: northwoodmortgage.com

Should You Negotiate Your Mortgage?

Finally thinking about joining the homeowner club – negotiation is a key trick of the trade when it comes to mortgages. If you know the power of negotiation, you will save yourself a lot of hassle, money and time in the end.

Becoming educated on the home buying process and the financial aspects of it, can give you the upper hand. Remember the lenders are competing for your business, you don’t have to just settle for what you can get, you can get the best if you know your stuff.

3 Tips to help you negotiate your mortgage

• Calculate your finances.
It’s important that you are fully aware of your finances. Know your credit score and how much money you have in the bank. If you have a high credit score, try to maintain it. If your credit score is on the lower end, speak with your financial agent to find out the best way for you to improve it. Your finances play a major role in the amount of money you will be offered by lenders and if you are confident with your finances, you will make a better negotiator. Use a mortgage calculator to check out payment and interest options.


• Shop around – visit different lenders and listen to their offers.
Be prepared to visit a few lenders to find the best deal for you. They should lay out all of the information in a clear and concise way, so you will be able to understand 100% of what they are offering.


• Don’t make any impulsive decisions.
Think of the big picture – don’t rush it. Take time to think about the offers and what looks the most attractive to you.

There are many mortgage terms that lenders are usually willing to negotiate, but two of the main ones are:

1. The Amortization Period
Let’s start with what the amortization period is on a mortgage: it is the period of time it will take to repay your debt (mortgage) in installments on a regular fixed schedule. The amortization period makes a huge difference when it comes to your mortgage payments and the amount of interest that you will pay on the mortgage life.


2. Interest Rates
These rates vary but lenders are able to offers some customers ideal rates.

Speak with one of the experts at Northwood Mortgage to find the best mortgage for you.

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 it Hard to get Approved for a Mortgage if You’re Self-Employed?

In today’s entrepreneurial-focused economy, a lot of people have left their cubicles to pursue a path of self-employment. In a lot of cases, this means more money and a more flexible work environment!





Unfortunately, in spite of all the perks to self-employment, there are also a few pitfalls—one of those being the ability to easily qualify for a mortgage. Self-employment doesn’t make getting a mortgage impossible, but it does make it more challenging.

With the right steps and savvy, getting a mortgage can be just as easy for you as it is for someone with a high-paying desk job, but the steps you’ll have to take to get there will just be slightly different.

What to Expect

Unfortunately even if you’re bringing in as much money annually as somebody with a traditional, stable job, a lot of lenders will be wary of offering you a mortgage. This shouldn’t turn you off from obtaining a mortgage. Yes you’ll have to do a bit more shopping around for the right mortgage broker, but it’s absolutely possible.

How to Improve Your Odds

Due to the general bias of mortgage lenders towards self-employed prospective homeowners, you’ll want to beef up your application a bit if you want to be taken seriously.

Here are a few ways to do exactly that:

Improve Your Credit Score

Whether you’re applying for a mortgage or a student loan, the higher the credit score, the bigger the loan and lower the interest. Do everything you can to build up the highest credit score possible before you start the mortgage application process.

Offer a Large Down Payment

    The larger the down payment, the less likely you are to default on your loan and walk away. This will eliminate a lot of the risk that mortgage lenders might feel. You’ll also need to borrow less money, which lenders find favorable.

Save up Cash Reserves

    If you can show lenders that you have a stacked emergency fund, they won’t have to worry about what is going to happen if your self-employment income decreases before you’ve paid off your mortgage.

Establish a Track Record

    You’ll have a harder time being taken seriously if you’ve only been successfully self-employed for a few months, no matter how successful you’ve been in that time period. It’s best to build up a positive track record of self-employment for at least two years before applying in order to get the best mortgage rate.

Provide Documentation

    Every piece of documentation helps when you’re applying for a mortgage as somebody who is self-employed. Tax returns, profit and loss statements, and balance sheets will all show that you’re being transparent and will improve mortgage lender’s trust in you.

Overall, the path to securing a mortgage as a self-employed individual might take a bit longer, but it’s most definitely a possibility.

If you’re self-employed and are looking to explore your options with mortgages, contact Northwood and see what we can do for you!

source: northwoodmortgage.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

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