• Recommended Links

Yesterday, ZERO DOWN LENDERS FOLDING was emblazoned on the front page of the Denver Post.

The article discusses in detail how subprime lenders are going out of business. The model suprime lenders use is usually the same across the board. Typically they offer 2 or 3 year adjustable rate mortgages. Once the borrower has a two year history of paying a mortgage they usually refinance to another loan. Hence the term band aid loans or band aid lenders. These lenders are going broke and now it’s front page news.

About two dozen of the largest subprime mortgage lenders across the country - some with offices and customers in Denver - have gone under or stopped making loans since December….

Subprime lenders are typically viewed as lending options to poor credit borrowers as well as borrowers with collections, bankruptcy, or foreclosures. However, they cater to more than that:

1. If a borrower has great credit but no assets, they may be a subprime borrower.
2. If a borrower has poor credit and a multitude of assets, they may be a subprime borrower.
3. If a borrower is buying their first home but doesn’t have the income necessary to qualify for a FHA loan, they may be a subprime borrower.
4. If a borrower has more than one late payment on a mortgage, they may be a subprime borrower.
5. If a borrower is buying a home and renting a room to a friend, they may be a subprime borrower.
6. If a borrower… well you get the point. The scenarios are endless.

I just finished reading an article called How Cheapest Family in America Saves Cash. It’s about a family that lives cheaply. They’re so cheap, the father considers himself the Cheap Economizing Officer of the family. The article goes on to say they basically plan their expenses and execute their plan.

Living cheaply doesn’t mean that you’re poor. It means that you know what you’re spending your money on and you don’t make hasty decisions. Warren Buffet may be bullish on Wall Street but he’s notoriously cheap. Just ask the heirs to his massive fortune.

I often think of people I’ve worked with in the past who’ve whined about how their bills piled up and they just can’t seem to get ahead. Economic pundits call it “living paycheck to paycheck” or “keeping up with the Jones” and it affects the affluent as well as the poor. Sometime I just wish people were cheap.

I’ve seen people own timeshares mainly because they believe they deserved yearly vacations. At a mere cost of $300 a month. I guess during the aggressive timeshare pitch they never thought that $300 per month would greatly impact their daily life. After viewing a timeshare program in Hawaii I can honestly say that they’ve got to be the dumbest investments ever! The sales pitch was to “preserve my family’s vacation dollar” or something to that affect. If I really wanted to preserve my family’s vacation dollar, I’d skip hotels and strictly use vacation rentals by owner. The rates are competitive and I can get a condo instead of a hotel that way I wouldn’t have to eat out all the time.

I’ve also seen people drive really nice cars. Does driving an Audi or a Lexus really define who you are as a person? Probably not. A car is a depreciating asset. It does nothing for your net worth. Over time it gets old and you’ll be wanting a new car because it’s the toxic ethylbenzene (the new car smell) that got you hooked in the first place. If you’re going to buy a new car, do your homework. Not every car has good resale value and you’ve got to really consider why a Ford dealership is unloading their Ford Escapes at a fraction of the cost when Honda dealers rarely budge on their Accords.

I’ve seen people with credit cards up the wazoo. I’ve heard every story as to why people have a lot of credit cards and they just don’t fly. One or two is more that enough. I’ve always viewed credit cards as a loan from guys with names like Vinny and Vito, if I can’t pay it off in 30 days, it aint worth the beating I’m going to get. (If your name is Vinny or Vito, Come stai paesano!)

Don’t even get me started on the homes people buy. During the last few years the American dream of buying a house with a white picket fence turned out to be a nightmare.

In conclusion, there’s a certain comfort in living below your means and while being cheap is not sexy, it’s not stressful either.

There are many reasons why you should employ the services of a professional, licensed mortgage broker when you are ready for your next home loan. Probably the biggest reason is that they are on your side. If you go directly to a bank to get a home loan, the banks loan person has only the banks interest in mind, not yours. Another reason is that mortgage brokers are contracted with banks and lenders at wholesale prices, which mean you can get a better rate. For example, if you had the option of buying a new BMW from either the BMW dealer for full price, or from BMWs wholesaler that gets the cars directly from the plant at a huge discount, which would you choose? Most people like to save money and when you work with a mortgage broker, you are likely to get a better rate.

Mortgage Brokers work to find the best loan program for your specific situation matching you with the loan program that fits best. Having access to hundreds even thousands of loan programs means that your broker will find the best program for your personal needs.

What’s the difference between a mortgage broker and a lender? A mortgage broker counsels you on the loans available from different wholesalers, takes your application, and usually processes the loan which involves putting together the complete file of information about your transaction including the credit report, appraisal, verification of your employment and assets, and so on. When the file is complete, but sometimes sooner, the lender “underwrites” the loan which means deciding whether or not you are an acceptable risk.- Back to Top -Will I save money going directly to a mortgage lender? Not necessarily. In fact, if you are a reasonably astute shopper, you will probably do better dealing with a mortgage broker. Mortgage brokers do not add any net cost to the lending process, because they perform functions that would otherwise have to be done by employees of the lender. Furthermore, because mortgage brokers deal with multiple lenders — in a typical case, 25 to 30, sometimes more — they can shop for the best terms available on any given day. In addition, they can find the lenders who specialize in various market niches that many other lenders avoid, such as loans to applicants with poor credit ratings, loans to borrowers who do not intend to occupy the property, loans with minimal or no down payment, and so on.

The best reason of all, the Mortgage Broker works for you. He doesn’t work for the bank or any lender, but for you. His primary goal is to fit you into a product that is right for you, process the loan as quickly as possible, fund the loan in a timely manner. Another satisfied client and hopefully many referrals

Another reason to work with a Mortgage Broker is that you will have access to hundreds of loan programs instead of the small number offered by a specific lender. Mortgage Brokers also are more likely to help borrowers with poor credit, hard to prove income, or financing for unique situations.

Brokers make banks compete for your business

By having the ability to switch lenders at any time A mortgage broker can also deal with any problems that may arise much more efficiently then a bank.

Mortgage brokers have hundreds of loan products available to them, where as your local bank may have only a handful of loan programs. This means that credit, income, and other factors are not as important when it comes to getting you approved. The mortgage brokers job is to take a completed loan application and present it to various lenders, to find you the best possible rate and program that fits your needs.

Mortgage Brokers are compensated only if the mortgage loan closes. For this reason, mortgage brokers have an interest to see to it that the home buyer’s purchase proceeds quickly and smoothly.

There are many lenders in today’s market that can help a person who had some event that caused them to either file bankruptcy or get behind on the bills. These lenders are called subprime lenders and many have really aggressive programs.

Consider using a 401k loan, or withdrawal, in order to come up with a good sized down payment on a home to help you qualify for a loan with less than perfect credit or even very bad credit. Many times you can get away without being penalized by the IRS if you use a 401k withdrawal for a down payment for the purchase of your first house.

If you have consulted with your mortgage professional and are still having trouble buying a home with poor credit, consider looking into buying a house through a land contract. With a land contract you buy the home from the seller, however the seller retains the mortgage loan and you agree to make monthly payments of a certain amount to them for a certain period of time. You do not take title to the property until you obtain your own financing on the property.

An important part of getting a mortgage with less than perfect credit is to make sure that you are paying your rent on time and by a check. This will show the lender that you have the ability to pay as some mortgages are based solely off of the rent history.

A lot of times credit issues can be resolved fairly quickly with systems that lenders use like “Rapid Rescoring”.

Some loan programs will allow you to purchase or refinance one day out of bankruptcy (some up to 100% loan to value) and others will allow a bankruptcy buy out to refinance (Chapter 13). If you are looking to do a bankruptcy buy out, you must first get permission from the bankruptcy judge and make sure your payments on the plan have been current for at least 12 months. By rolling the bankruptcy into your mortgage debt you could save hundreds every month. It is also a good idea to think about debt consolidation before filing for bankruptcy. It could save you money and not hurt your credit like a bankruptcy will.

You may want to consider professional credit improvement programs, which can boost credit scores to qualify for bad credit mortgage programs

Banks evaluate the credit worthiness of a loan application by three major criteria, credit, income, and assets. Potential home buyers with bad credit profiles should scrutinize their other two aspects. A mortgage applicant with poor credit can most likely get home financing if his income is proved to be sufficient to repay the loan and his other debts, and if he has ample assets as reserves after making a large down payment towards the house.

When considering getting a mortgage with poor credit it is often important to employ a long term strategy. One such strategy might be to take a two year fixed subprime loan and pay off consumer debts through the loan. With the debts paid off and better monthly cash flow the borrower should have a much better credit score two years down the line. At that time the borrower can refinance into a more permanent financing program such as a thirty year fixed.

The best way to get a Mortgage with poor credit, is a large down payment. The more money you put down, the easier it will be to get a mortgage. But even if you can not afford a large down payment, there are loan programs for people with poor credit and there are also down payment assistance programs.

There are many sub-prime and niche lenders available to people with poor credit. These lenders have very aggressive programs available to help almost any borrower. There are even programs available for 100% financing. A qualified mortgage professional will be able to find you the best lender to fit your particular situation.

No. Imagine if perfect credit was required. Few loans would be made and every lender in town would be bankrupt.

If you have poor credit you should strive to improve your credit rating after securing a mortgage. This will allow you to refinance at a conforming rate and save you money every month.

When banks underwrite a mortgage application, there are four major factors they consider. Credit history is only one of four. Lenders also examine the loan applicant’s ability to repay the loan, the homeowner’s asset reserves, and the loan amount in relation to the property value, in other words, how much is the homeowner putting up in the property. With one or more of the other three factors being above average, even a homebuyer with below average credit profile can easily obtain a mortgage.

Even if you have filed for bankruptcy or are currently in foreclosure, contact us about refinancing your property. You do not need perfect credit, even bad credit is OK with us because we have thousands of loan programs for borrowers of all credit types.

There are some lenders that do not even look at FICO scores. This is because sometimes people have not established any credit , but yet will still make rental payments and utility payments on time. These various payment histories will appear on an individuals credit report.

If you are thinking about buying a home but you are not quite sure if you can qualify then it might make sense for you to contact a mortgage broker. A good mortgage professional will not only look at your credit but will also look at your complete financial picture to see what makes sense for your current situation. They will also make recommendations on what programs will be available for your situation. If you are unable to obtain a mortgage now a mortgage professional will help guide you through what needs to be accomplished so you can qualify real soon.

There is no such thing as ‘perfect credit’ . All consumers who have a credit rating fall into either ‘conforming’ or ’subprime’ financing category. There are even programs for first time borrowers who have no credit history. However, some consumers who have had difficulty meeting their commitments may have credit so damaged that they could be asked to raise their credit score to qualify .

Perfect credit is not needed to get a mortgage because most lenders do not judge borrowers on credit alone. Although, credit is a big factor when applying for a mortgage each lender has different criteria to be approved for a mortgage. Lenders also take into account a borrower’s mortgage/rental history, employment history, and other factors. There are many lenders that target borrowers with less than perfect credit which is called sub-prime lending.

There are many different types of mortgages that you will be able to get without perfect credit. Some programs use the credit score only, only the mortgage history, and some will even disregard collections and judgments allowing them to exist without having to pay them off.

Sub-Prime lenders specialize in people with less than perfect credit. With the loan programs available in today’s market most people can purchase a home.

There are many factors you should consider when deciding what type of mortgage will best fit your situation. Some of these factors include: length of time you plan to spend in the property, interest rate market conditions, housing market conditions, credit rating, length of time to retirement, type of home (investment or primary residence), current and future income, type of income, etc. The length of time you plan to spend in the house or the amount of time before you refinance again can affect the type of mortgage you choose. For example if you are buying a starter home, and plan to move to a bigger home in the next 5 yrs, you may want a 5/1 ARM rather than a 30 fixed rate. However if this is the bigger home you are buying and you plan to live there until your new born graduates college, a 30 yr fixed rate may be more appropriate.

Rates change every day, sometimes during the day. The interest rate you qualify for depends on your credit score, the type of loan you want, loan to property value, and other factors. The best mortgage professionals always discuss needs and financial situation before quoting rates.

When choosing a mortgage, it is important to select a loan program which enables you to achieve your financial goals. Customers seeking to use their houses as powerful tools for building their financial future should focus on loan types which maximize cash flow and enable investment into diversified liquid asset classes.

Interest rate market conditions can affect what type of mortgage you choose as well. Considering we are currently in a rising rate market (while rates fluctuate daily there is a general upward trend) a fixed rate mortgage is generally preferred over an ARM. In the past while rates were on a downward trend borrowers with an adjustable rate mortgage could take advantages of not only lowering rates, but saved on closing costs because they did not have to refinance to get the lower rates.

When comparing programs from different brokers, make sure you are comparing the loan programs with the exact same terms. Always obtain a good faith estimate (GFE) and a truth-in-lending statement (TIL) to help you determine what is best for you.

The type of mortgage that you choose may also depend on your credit. If your credit is poor and you are in the process of cleaning up your credit then a shorter term ARM may be best for you. You can take advantage of lower rates than a fixed rate while you clean up your credit and then refinance later when your situation has improved. If you have excellent credit than this would not be a factor.

Real property investors often choose loan programs with low monthly payments, for if the monthly mortgage payment is smaller than the rental income, the property has a cash inflow, which is almost always preferred to one with monthly cash deficit. Some of the loan programs that offer low initial monthly payments are Adjustable Rate Mortgages (ARM), Option ARM, Interest-Only loans, Hybrid mortgages, and Balloon mortgages.

Credit rating is very important when applying for a loan. Higher scores typically means less paperwork. The lower the score, the more documentation you will need to close. In addition the higher the score the higher LTV or loan-to-value you will qualify for. If you are unhappy with your credit rating then seek out a credit repair company to help with the negative items on your credit report. In most cases your mortgage broker will be able to recommend a good company. Another note about your credit rating; if your credit card company pulls credit on you like they normally do once a year and find that your scores have dropped, they can raise the interest rate on your card at their discretion. It’s really important to keep those scores as high as possible.

Be sure to choose a mortgage professional who takes into account your own unique situation, to recommend the best loan options for you.

Your current and future income may also be a factor when considering what type of mortgage to obtain. In many situations borrowers are employed in an industry that has consistent dependable salary increases. In that instance a borrower can expect to be making more money in the next 3-5 yrs, thus they can afford a larger payment down the road. An Interest Only option on your mortgage may fit your need. You can afford a larger home now, and you will be able to afford the future increase in payment when the interest only period ends.

The housing market may affect what type of loan you choose. Is the market strong with large increases in home value over short periods of time? That would mean you could afford to take on a more non-traditional loan. Or you could save the down payment for other purposes and go with 100% financing. Is the market slowing down or in your area are home prices dropping? You may want to keep saving for a couple months and use that money for a larger down payment, so you don’t end up owing more than the home is worth in a year or two

The type of income you make may affect the type of mortgage that is a fit for you. Do you work in a stable industry with a high degree of job growth, high likely hood of continued employment with increasing salary? Then you may want to go for the basic fixed rate or an interest only loan. Is your income variable, do you make seasonal changes in income, is it a sales job where your income is up one month and down the next? Maybe an loan with flexible payments would match your income such as a Pay Option ARM.

Editors Note: Due to the mortgage and credit crunch, 100% financing has been eliminated. If you’re in need of a Denver Financing contact us to discuss your mortgage options.

100% Financing allows you to buy a home with no money down.

100% home loans are widely available nowadays. Not only do government loan programs such as FHA and VA offer Zero Down mortgages, conventional loan programs with No Money Down feature are also offered by many traditional mortgage banks.

100% financing can be a great loan even for those who do have access to a down payment. Down payment funds can many times can be better kept aside for things such as other investment opportunities, a reserve account for emergencies and future home improvements.

Many people wait to receive income tax money, a big bonus at the end of the year, or a large gift from an immediate family member before they begin looking to buy a new home. A 100% zero down loan eliminates this waiting period and allows you to obtain the home you want now. Especially now with the uncertainty of interest rates and where they will be in the next 6-12 months. Now is the time to begin looking for your dream home. Waiting may cause you to accept a higher interest rate because the rates have increased during the time you waited. Even if you do have money available for a down payment it is always a good idea to keep some money put away for a rainy day or for an old furnace that needs to be fixed, an old water heater that needs to be replaced or some other basic home repairs. Also, you may want to have some money left to help pay for some of the costs associated with buying a new home, such as buying window treatments, decorating, new furniture, etc…

Almost all lenders allow this now and it can even be done with poor credit. Down to a 560 currently, although the interest rate will be reflective of your credit score!

By using 100% home financing option to control your up-front expenses by reducing your down payment to as little as zero without having to pay mortgage insurance. Most commonly know as 80/20 combo mortgages.

Besides being commonly known as 80/20 combo mortgages. 100% Financing can also be called NO MONEY DOWN or ZERO DOWN.

With 100% or Zero Down home loans, a home buyer is able to minimize his or her out of pocket expenses allowing them to purchase their dream home much sooner. In addition this allows more cash for the family to use for other home necessities.

You can now get 100% financing for the full purchase price of a home a single loan. In recent years, loan products have been developed to provide home buyers with the opportunity to purchase a home without a down payment. For many years, the minimum down payment required was 5% of the purchase price for a home. Then, special first-time home buyer programs came into existence, which usually required a 3% down payment. Now you can buy a home without a down payment.

100% Financing programs are off erred by lenders in markets where property values are stable or increasing. In markets that show decreasing property values, lender are much less likely to offer 100% Financing programs.

Often you can still do 100% Even with poor credit with a seller carry back. The lender will finance 80% and the seller will finance the remaining 20% Some lenders will allow this even with a credit score as low as 540!

Writing closing costs into the Purchase and Sale contract is called adding “seller concessions”. Many lenders will allow up to 6% of the sale price of the home to be paid in seller concessions.

If you are considering purchasing a property with no money down, please contact your local mortgage agent before you write your offer.

One effective way to get a win-win is to help someone with no down payment money on a For Sale By Owner home. The seller is more likely to agree to seller concessions when they know they are saving the realtor commission. If you find a 100% loan for the buyer and the seller will agree to 6% seller concessions, the broker can get a fair commission for playing real estate agent and directing the parties to a good title company or attorney to help with contracts and closing. This is often considerably cheaper than FHA because FHA has the mandatory up front PMI of 1.5% although the interest rate may be a little higher than the FHA rate. You might also ask your mortgage broker about companies that offer to have the PMI added to the interest rate where it is tax deductible, or have them do an 80/20 loan to avoid MI altogether.

100% financing does not include your closing costs. Your Real Estate Agent may write the closing costs into the contract for the seller to pay so that you may not be required to use any of your funds to purchase your home.

If your credit score is below 700, another excellent way to avoid PMI Private Mortgage Insurance on a 100% purchase is to contact us and enquire about a subprime 100% purchase mortgage loan.

You will still have to put down earnest money on the home you plan to purchase. If you obtain 100% financing, the earnest money will be used toward your closing costs.

Borrowers with strong credit scores will have more 100% financing programs to choose from with better rates than a borrower with a lower score.

Although more difficult to qualify for, there are No Money Down programs for investment properties as well. The property has to be residential, up to 4 units. As an investor pay close attention to your cash flow on any property as 100% financing often pushes expenses beyond income.

Many people today are opting for 100% financing, or zero down programs. This puts you at an advantage if you already have cash on hand. While it would seem logical to put money down towards your purchase, you may want to consider your situation after the loan closes. Will you have enough cash left over?

• Denver Lender LLC

  We are a mortgage company located in Denver, Colorado. Click here to compare mortgage rates.
  

• Search for:

• Tags

  adjustable rate mortgage appraisal colorado commercial compare consolidation construction conventional credit score debt denver fha first mortgage first time home buyer fixed rate mortgage foreclosure home equity home equity loan home loan investing jumbo lending loan amount meltdown mortgage mortgage backed securities negative amortization prepayment prime property purchase rate rate increase real estate refinance reverse mortgage second mortgage shopping stated income Subprime va value

• Recent Posts

  • No Country for Mortgage Brokers
  • File under…
  • Monday Morning Quarterback
  • Keeping up with…
  • Video: The Subprime Meltdown of 2007
  • Pavilions, Argonaut, and more
  • Why don’t we save?
  • Spanning the web
  • Mad World
  • What will 2008 bring…

• Legal

  The content provided on this website is presented for informational purposes only. The information provided on this website should not be construed as offering legal, financial or other advice to be relied on by the reader to make or refrain from making any decision or to take any action. The investment, mortgage or financial services or strategies mentioned in and throughout this website may not be suitable for you.