Home Equity Loans & Credit FAQ's
Home-Equity-Loans-123.com
Your credit history can greatly
influence you home buying power
If You Have a Record of Bankruptcy
Q: I am coming up on retirement
very shortly and plan to cash out my pension. This will be my
first time buying a home. I have also declared bankruptcy in
the past, which is still on my credit report. What options do
I have in buying a home?
A: Other than waiting for
your bankruptcy to be removed off of your credit report - which
takes ten years - it is best to start creating good credit if you
have not done so already. Although lenders are impressionable to
bankruptcies, if your bankruptcy was filed as little as two years
ago and you have established good credit since then, you have
a much stronger chance in getting approved for a loan.
If you happen to be denied due to a
bankruptcy and/or bad credit history, there are other ways of
getting approved. If you have the savings, by depositing a
large down payment on the property you want, the lender will be more
inclined to approve the loan - since you have demonstrated your
commitment to invest in the property.
Another method of getting approved
for a loan is by taking a sub-prime loan. Although this loan
has higher interest rates and greater points, if you are content in
having greater and/or more monthly payments, there are lenders out
there content to approve you for this type of loan.
If You Have A Less than Perfect
Credit Record
Q: I make around $50,000 per
year and am planning on purchasing a new home. The asking
price is $120,000 and I can put $10,000 down. My credit rating
is anything but above average. What might I expect to be
offered from a lender?
A: Considering current interest
rates on the market and your annual income, you could easily receive
a loan worth $110,000. Generally, lenders base their loans on
expectations that borrowers will not spend more than 33% of their
monthly wages on residential costs. However, this is also
based on other current indebtedness you may have as well. With
a B credit rating, you may be requested to put a down payment of
more than $10,000 - which is approximately 8%. If you are incapable
of putting a greater percent of money down, you may be charged more
points, which are added fees the lenders impose on you for lending
you the money. (One percent of the borrowed amount is
equivalent to one point).
For an approximate idea of what will
be lent to you, use our mortgage machine found on this site.
It will calculate your loan amount and monthly payments based on
more than your credit rating. Remember, lenders consider other
factors such as investments, current bill payments, and cash
reserves.
Home Equity Loan Refinancing Guide
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