Is it harder to get a mortgage if your credit isn’t perfect?

by Nancy Woodward

Although everything in the world of mortgages is not black and white, generally you must take good care of your credit history to easily obtain a mortgage. Lenders consider credit scores to determine if you are worthy of a loan.

Most lenders see scores above 700 as positive indicators of good credit health while scores below 600 are deemed to be risky. Interest rates for mortgage loans are higher if your credit score is in the lower ranges.

Lenders seem to be pulling in the reins on mortgages or refinancing if your credit score has marks on it. Many lenders don’t want to handle riskier loans when the market is slower.

Novastar Financial Inc. of Kansas City, MO, lost 42 percent of its share price due to a fourth quarter loss of $14.4 million. Company officials set aside $45 in anticipation of defaulting mortgages.

When the market shifts, investors demand much higher standards to approval a mortgage loan. This shift causes some consumers to be squeezed out of the market.

During the past few years, many homeowners borrowed against their homes while the market was forging forward. They now have second mortgages and home equity loans to pay when the economy is tightening. Real Estate prices are leveling at this point.

The nation’s economy may be affected by the slowing housing market and increase in the interest rates. The trend for lenders and investors will lean toward more care when handing out mortgage loans. This does not mean you can’t obtain financing, it just means it make take a bit of creativity.

Mortgage Loan Rates may Rise

Mortgage Rates May Rise – if Inflation risk Increases
By Nancy Woodward

According to Charles Plosser, President of the Federal Reserve Bank of Philadelphia, the Federal Reserve may need to raise the benchmark interest rate as recent stronger US economic growth increases the risk of more than moderate inflation.

Mr. Plosser discussed the growth prospects in a speech to the Greater Philadelphia Chamber of Commerce. He feels we may not see stability without an increase in the rate to avoid inflation.

The Fed has not changed the benchmark interest rate which stands at 5.25 percent. This is the fifth straight meeting they where there has not been an increase. The benchmark rate affects the rates which bank charges for loans to individuals and business customers.

The Fed is concerned over inflation. Possner thinks it is possible that moderate inflation will continue although he is concerned over the 3.5 percent annual pace the economy expanded in the last quarter.

Greater growth than expected fuels the fear of inflation when the economy is strengthening. Let’s hope the fears are unfounded. Rising inflation affects all of us, particularly the Real Estate – Home Loan Market.

If you are in the market to buy Real Estate, you should keep an eye on this. You will win on the value of the home you buy now, but you can offset that win with a greater than expected interest rate.

Consumer Prices are Growing Creating Inflation Worries

Consumer Prices are growing creating Inflation Worries – Where will this leave interest rates?
By Nancy Woodward

Rising prices are a fact of life. When prices rise faster than expected, the powers in charge are very concerned.

The Consumer Price Index rose .2 percent in January, 2007. Considering there was a large drop in the costs related to energy, this indicates the cost of medical care, food and plane fair rose at a faster pace.

Economists were not expecting this size increase. The Fed held its meeting yesterday and they again expressed concern that inflation is the biggest threat to our economic future. With prices rising and performance slowing, the threat is definitely increasing.

If the Fed becomes concerned enough, Fed Chairman Bernanke will raise interest rates. Rising rates directly affect mortgage rates and the ability of the consumer to buy homes. First time buyers have a harder time qualifying for a loan when rates rise.

The number of homes in inventory rise. Builders and contracts slow their efforts in the new construction arena. Those businesses affected by the rising rates reduce their spending in other areas to compensate for cost increases.

All of this causes growth to slow down thereby affecting inflation. While it is good to slow inflation, those affected negatively by the process would disagree. Hopefully the economy will hold it self in check and Bernanke’s statement to Congress that inflation pressure would decline over the next two years as growth remains moderate will, in fact, be the way it goes.

Mortgage Loans – Are No-money-down Mortgages Risky?

by Nancy Woodward

Once upon a time, home buyers were required to make twenty percent down payments when they bought homes. Many people saved their money until they had larger down payments.

Today, it is more unusual to find any one making a large down payment. Skyrocketing real estate prices have surpassed buyer’s incomes and savings. National surveys indicate this trend is increasing in today’s real estate market.

According to the National Association of Realtors, a statistical sampling of a group of 7,500 purchasers from mid-2005 to mid-2006 was conducted and it was found that nearly half of the group of first time homeowners financed the entire mortgage. This means they began owning Real Estate with no equity at all.

An additional thirty percent put less than ten percent down, and twenty percent put down less than five percent. This means eighty percent of first time buyers became Home owners with less than ten percent equity.

Since this survey used information from Experian, one of the three major credit and realty data firms, the numbers are definitely representative of the situation. Experian stated the median down payment was actually two percent.

I consider this trend to be very risky. It is possible these home owners can find themselves with a mortgage and principal balance that is greater than the current market value of their home. In flat and depreciating market conditions, the risks are great.

Five of the top reasons for greater risk are:

1. Real Estate Market fluctuations..
2. Job transfers.
3. Large consumer debt.
4. Corporations downsizing.
5. Trend toward mega-corporations.

I would not recommend making a small to non-existent down payment to anyone who does not have sufficient capital in the event they need it. While I do realize there are many more home owners due to this practice, I consider it to be too risky for the average first time buyer.

Real Estate Investing

Real Estate Investing
By Nancy Woodward


Investing in Real Estate has never been more popular. When markets correct, other markets offer better buying opportunities.

Use the internet to search - Eighty percent of home buyers do this now.

Webinars help you learn all about this subject. My Friend, John Oconnor, is currently helping investors at all levels learn to earn. Please visit John's new site RealEstateInvesting to learn more on the subject and be sure to let him know you hear about him from me.

Nancy Woodward
The Million Dollar Referral Lady
http://therealestatedir.blogspot.com

Approval for Loans depends on Your Credit Rating

by Nancy Woodward

Getting approval for any type of loan depends on your credit rating. If you have average credit rating, you will find it almost impossible to get approved. It’s possible to get good rating or even improve you credit rating. Most companies almost use same rating system and if you are able to know more about it you should be able to have better credit score.

Your age is the first factor which it’s almost impossible to do anything about. Yes it’s possible to lie, but don’t because it will make things more difficult for you in future if the creditor get to know. If you are between 24 to 64 years of age you will get one point. Any age bellow or above that will score you zero point.

If you are married you have chance of adding extra point to your score. If not, you still score zero as most creditors see you as a higher risk. Also if you have no dependant you will score zero. But if you have between one to three you will add to your points. Here is how it works – if you have no dependant creditors believe you can skip town and not pay off your credit.

Creditors will also want to know more about your root. They will want to know where you live. Owning a home with a big fat mortgage or even without mortgage will give you more points. How long you stay in your present or previous residence also adds more points to your score. If you’ve move so often you will score zero point. However, if you’ve stayed up to 5 years before moving, you will surely get more point. It shows you are a good risk to them.

Other factors that will add to your point are your years on job (the longer the better), kind of job, your monthly income, present debt status, previous credit history and your saving or checking account.

Bad Credit - You can Still get a Loan

Bad Credit? You can Still get a Loan
by Nancy Woodward

Don’t let bad credit get you down - you can still get a loan. With a mortgage loan, college loan or even a personal loan, many mortgage lenders turn bad credit down. However, there are some who will take a chance with you. Just because you have bad credit does not make you a bad person. When you have bad credit or absolutely no money to put down you should look for a bad credit mortgage lender.

A bad credit mortgage lender helps those who have a bad credit score or low income. They can also help get your loan approved faster than other programs. Although getting a bad credit loan may be easy, a bad credit mortgage loan has its price – you will likely pay higher interest rates and higher closing fees.

However, just because you will be carrying a higher interest rate doesn’t mean you shouldn’t look at many different companies and compare rates. Shop around before settling down. If you find one that fits your goals than go for it. Just don’t settle for the first one that you find. At this moment in time interest rates are low and it is important to get the greatest deal to avoid defaulting on your loan.

You can also solve your poor credit problems with time and knowledge about finances. Perhaps you might decide to wait on a home loan while you work to bring up your credit score. If you deicide to do this then its possible you will start out with a much lower interest rate.

When getting a bad credit loan you may find that they carry a pre-payment penalty, so you will want to check all information given to you for that. These penalties range from 6 months to 2-3 years. This could mean that you have to pay huge amounts of interest for a minimum of 6 months before you can even start to pay off your loan. If you get a loan that has a pre-payment penalty you will want to make sure you choose the shortest term so that the loan is paid off quicker and without the penalty. If you are looking for a bad credit mortgage lender, you’ll probably be able to find this resource online or through referrals through other lenders. Search for the mortgage loan that will help you to find the absolute best bad credit refinance loans and bad credit home equity loans.

Mortgage Loans - Refinancing Your Mortgage is on the Rise

Mortgage Loans -Refinancing Your Mortgage is on the Rise
By Nancy Woodward

Long term mortgages rates are remaining relatively low. The average rate for a thirty year loans is approximately 6.2%. Since home equity loans and lines of credit have their interest most often tied directly to the prime rate, they have gotten more expensive since the prime is now over eight percent.

Many customers prefer to have a fixed rate loan than risk their economic future on fluctuating rates that can continue rising in the future. Freddie Mac says 89% of the loans it owns that were refinanced in the third quarter of 2006 had amounts at least five percent higher than the original mortgage balances.

According to the American Bankers Association, the dollar amount of home equity loans has increased by an annualized 14.6% for the first three quarters of 2006. This includes both home equity loans and home equity lines of credit.

Before you consider refinancing, you should look for the most economical way to accomplish this. You should also consider if refinancing to take additional cash is a wise move. If refinancing gets you a better rate and it has been a long enough period of time since your last change, then perhaps it is a good move.

If you have credit card debt, it is often financed at a much higher rate than you can obtain with a loan connected to your real estate. Sometimes you can obtain a fixed rate loan for a home equity line that will help you reduce your loan expense.

Consider the fees it takes to accomplish new financing and the time for repayment of the new debt. I personally am working on paying off my current mortgage with a Mortgage Payoff program.

I am now in the process of financing a second home. I just obtained a first mortgage at slightly less than 6.2%. Since this article was originally written about a month ago, the rates are remaining at the same levels.

If I had a loan that was at a higher rate - generally more than 2%, I would consider refinancing it to bring down my mortgage payments. You should consider how long it will take you to recoup the fees you spend to do this.

Jim Edwards’ Mortgage Loan Tips will tell you why some people almost always get the lowest interest rate on their home mortgage loan and never pay too much in points or “junk” loan fees!

Check out Mortgage Loans Tips by Clicking Here! You will save yourself time and effort, as well as, money.

Arizona Real Estate - The Buying Motivation

Arizona real estate market is really hot. The centre of a lot of action in Arizona is Phoenix metropolitan area. However, when it comes to real estate investing, every area is hot. Based on whether you are looking for Arizona real estate just as an investment avenue or whether you are looking for Arizona real estate to actually live in, your preferences would change a bit. However, one thing which you would always want is a low price. And that is something that would require some effort.

If you are looking to get a piece of Arizona real estate for yourself and your family, then you need to consider a lot of different things which will also influence your perception of the lowest (or the best price) for that Arizona real estate piece. Note that the best price for the same Arizona real estate piece might be different for different people (because their level of motivation to buy a particular Arizona real estate piece might vary). So, if you have a lot of friends living in a particular area in Arizona, then Arizona real estate in that area might become your preference and hence increase your motivation level.

Similarly your buying motivation will be higher if you are planning to move into the place on account of a new job that you are taking up in that place or if you have been transferred to that place in your current job itself. If you have children, you would have to look around for Arizona real estate which has good schools around it. Again, you would like to evaluate your lifestyle and see if there is place that is in particular suited to your lifestyle.

So, there are a lot of factors that could lead to increased motivation levels. Generally, more the motivation of either side (buyer-seller), lesser is their negotiation power. So even if you are much motivated to buy a particular Arizona real estate piece, do not show it in front of the seller. Though hiding your motivation will be a bit difficult, nonetheless give it a good try.

If you are looking for Arizona real estate just for investment purposes then you would probably have a lot more time on hand to evaluate various properties before you actually go ahead with one. So your buying motivation will not (and should not) be too high. Remember that if you have time on hand, you can always get better deals (and there are lot of Arizona real estate deals out there, if you were to look properly).

I recently made an offer on a home in Tucson, Arizona. The market has slowed substantially and the inventory of unsold real estate has grown. I found a motivated seller who obviously didn’t want to wait any longer and was therefore able to buy a property in the Northeast part of town at a substantial savings. Take your time, find a good realtor and do your due diligence.


Nancy Woodward, better known as the million dollar referral lady, is a Real Estate and Mortgage Professional. You can discover how to achieve financial prosperity by subscribing to her online newsletter