Mortgage Financing for Self Employed Borrowers

It was not too long ago when self employed borrowers were able to qualify for mortgage financing with stated income and no documentation loans. With stated income mortgages, lenders simply asked borrowers to "state their income". If their credit was decent, their income seemed plausible for their industry, and their home appraised, they likely were able to obtain financing. With a no-doc mortgage, lenders typically just based their qualifying decision upon the borrowers' credit scores. That's it. No other supporting income, asset, or employment verification was needed.

While the idea of stated income loans may have seemed like a noble effort to streamline the financing process for self employed individuals, both borrowers and mortgage companies manipulated the system which led to a disproportionate number stated and no-doc of loans entering into default as borrowers took on mortgages that they could not afford. When you coupled these unconventional lending practices with depreciating real estate values, borrowers ended up underwater and unable to refinance out of their adjustable rate mortgages or higher interest fixed rate loan.

Today, stated income and no-doc loans are like finding a needle in a haystack as lending standards have become more restrictive and self-employed borrowers are back to having to supply years of tax returns in order to be considered for financing.

What is involved with getting a mortgage for someone who is self-employed in today's marketplace?

If you are self-employed, applying for and getting approved for a home loan will follow generally the same mortgage process as for someone working for an employer. However, instead of documenting your income with a W-2 and a recent paystub there will be a little more paperwork involved. You will likely be asked to provide copies of some of the following items, and possibly additional items if your situation warrants it:

• 2 years tax returns

• your business license

• a letter from your accountant

• a balance sheet and profit & loss statement for your business

Those who have been self employed for two years or more will most likely have an easier time getting approved, but that does not mean you will not qualify simply because you went into business for yourself six months ago. As with any other mortgage, lenders take many factors into account - employment is just one of them. Others include your credit report and score which shows your history of repaying debt, equity in the home, and the amounts of your assets and liabilities. If you are a good borrowing candidate based on these other factors you will likely stack the deck in your favor.

Factoring In Tax Liability - Impact of Write-Offs

When you are self-employed it is important to think about your ability to take out a loan not just when you want to buy a home, but also at tax time. The self-employed borrowers who generally run into problems are those who write off a large portion of their income as business expenses in order to decrease their tax burden. This can come back to haunt them when applying for a mortgage because their income looks much lower than it actually is on the only form most lenders can use to document it - tax returns.

Guide To Refinancing Your Mortgage

Refinancing your mortgage can mean great savings for you and your family. Replacing your existing mortgage with a lower interest loan, changing the term of your loan, or even consolidating all your debts into this new loan could save you money, both monthly and over the life of the loan.
The rule of thumb is when interest rates are 1.5 to 2% lower than you are currently paying on your mortgage, it's time to consider refinancing.
Would Refinancing Be Worth It?
Refinancing can be worthwhile, but it does not make financial sense for everyone. There are a number of items to consider, such as how long you plan to stay in the house. Most sources say that it takes at least 3 years to fully realize the savings from a lower interest rate, given the costs of the refinancing.
Refinancing can be a good idea for homeowners who:
* Have an adjustable-rate mortgage (ARM) and want a fixed-rate loan to have the certainty of knowing exactly what the mortgage payment will be for the life of the loan.
* Want to build up equity more quickly by converting to a loan with a shorter term.
* Want to draw on the equity built up in their house to get cash for a major purchase or for their children's education.
What Are the Costs of Refinancing?
Costs can vary significantly from area to area and from lender to lender, so the following are estimates only. Your actual closing costs may be higher or lower than the ranges indicated below.
Application Fee $75 - $300. This charge imposed by your lender covers the initial costs of processing your loan request and checking your credit report.
Appraisal Fee $150 - $400. This fee pays for an appraisal, which is a defensible estimate of the value of the property.
Survey Costs $125 - $300.
Homeowner's Hazard Insurance $300 - $600.
Lender's Attorney's Review Fees $75 - $200. The lender will usually charge you for fees paid to the lawyer or company that conducts the closing for the lender.
Title Search and Title Insurance $450 - $600. This charge will cover the cost of examining the public record to confirm ownership of the real estate, and the cost of an insurance policy.
Home Inspection Fees $175 - $350.
Loan Origination Fees 1% of loan. The origination fee is charged for the lender's work in evaluating and preparing your mortgage loan.
Mortgage Insurance 0.5% - 1.0%. Depending on the type of loan you have and other factors, another major expense you might face is the fee for private mortgage insurance.
Points 1% - 3%. Points are prepaid finance charges imposed by the lender at closing to increase the lender's yield beyond the stated interest rate on the mortgage note. One point equals 1% of the loan amount.
Prepayment Penalty. A prepayment penalty on your present mortgage could be the greatest deterrent to refinancing. The mortgage documents for your existing loan will state if there is such a penalty. In some loans, you may be charged interest for the full month in which you prepay your loan. In the future, always make sure there is NO prepayment penalty.
In Conclusion
A homeowner should plan on paying an average of 3 - 6 % of the outstanding principal in refinancing costs, plus any prepayment penalties and the costs of paying off any second mortgages that may exist.
Whether or not that is a wise decision is purely a numbers matter. http://www.mortgagerefinancetoday.com

How Can Home-Owners Get Better Deals?

When looking for finance, being a home owner has many benefits. There are loans specially designed for home owners that use the property as collateral to secure the loan, but home owners can also get better deals on unsecured loans. Both types of loans are explained in this article.

Home Loans, Refinance Mortgage And Home Equity Loans

These are secured loans, the property guarantees the loan and the creditor can rest assured that if you fail to make the monthly payments he can recover his money by means of the legal action of repossession. But, on the other side, the borrower will enjoy a much cheaper loan because the interest rates charged for secured loans are significantly lower than those of unsecured loans.

Home loans, also known as mortgage loans, are usually employed for purchasing a new home. Nevertheless, a mortgage loan can also be requested against a property you already own as long as it does not have other mortgages and can also be used for making home improvements or other purposes.

A refinance mortgage loan is a loan you request in order to repay a previous mortgage loan. The new mortgage replaces the previous one and the new loan is guaranteed with the same property. Refinancing can save you money if the new loan comes with lower interest rates or can make monthly payments more bearable if the repayment program is extended.

Home equity loans are secured personal loans that can be used for any purpose. The guarantee for these loans is not the whole property but the difference between the market value of the property and the remaining mortgage debt. This amount is called equity and determines the maximum amount of money you can request. There are however some lenders that offer a 135% finance combining the mortgage loan and the home equity loan.

Unsecured Personal Loans

As opposed to the previous loans, unsecured personal loans are not guaranteed by any asset. Since they require no collateral, these loans are the only option for tenants and non-homeowners. They usually come with higher interest rates, smaller loan amounts and shorter repayment programs. However, since they are the only option for those who do not own a property, they are widely available.

You may wonder why a home-owner would want to request an unsecured loan. The reasons are quite simple: Unsecured personal loans have no risk of repossession. Since there is no collateral, there is no legal action against a particular asset. The creditor has to take legal action directly against the debtor which takes a lot longer.

Moreover, since approval, loan amount, interest rate, and loan length are determined by the debtor’s credit when it comes to unsecured loans, home-owners can get much better deals on these loans than non-homeowners. The applicant’s assets are part of his overall credit worthiness and thus, the loan amount he will be able to request can easily reach the value of his property or even more. Similarly, the interest rate will be lower and the repayment program more flexible because, though not directly, the property will still be guaranteeing the loan along with all the debtor’s assets.

Home Loan Options for Newbies

The process of choosing a loan and a lender can be quite complicated but if you tackle it in stages you can avoid disappointment, frustration and wasted time. In choosing a home loan that's right for you, the considerations you have to think about are: (1) your needs, (2) the associated costs, and (3) the home loan features.

Considering your needs means answering questions like, "Do you want to make the minimum payments only?"Or "Do you want to be able to extend the loan in the future in case you're unable to pay?" Knowing what mortgage payment you can afford and is the first step into the whole process. Tampa mortgage rates for 2010 are available and are updated online so you can check them before making any decision.

The associated costs include interest rates, current mortgage rates, and fees. Mortgage lenders generally use a ratio of 36% as the guideline for how high your debt-to-income ratio should be. A ratio exceeding 36% could be seen as risky, and the lender will likely either deny the loan or charge a higher interest rate.

Luckily, loan calculators are available online now, so you can do your computations faster and more accurately.

Now it's time to shop for home loans. Like any ordinary shopping process, you have to know the key features of the product you're buying. Here are some home loan options you can choose from:

FHA Loans—or Federal Housing loan is ideal for first timers and middle to low-income borrowers. The FHA loan requires only small down payments; has no penalty payments; and will allow large sum loans when reasonable. Also includes the 203k loan or203k Rehab loan.

VA Loans—or Veteran Affairs loan is a mortgage option which provides American Veterans with financing assistance with their properties. The VA loan allows 100% financing without private mortgage insurance.

USDA loans—this loan is offered strictly for rural areas and is ideal for low and moderate-income families. The USDA loan is a government insured 100% purchase loan.

Reverse Mortgage—also known as a "lifetime mortgage" where senior citizens are allowed to make zero payments and all interest is added to the security interest on the property. Reverse mortgages helps in the release of the home equity in the property so as to use it for a single or multiple debt payment.

Refinancing—has low interest rates. This can help you reduce costs if you have an existing loan, but should be taken with caution if used for consumer purchase (like buying a car). If it lowers your rate by two percent, then choose to have your mortgage refinanced.

Do the math before making a choice. Factor in how much debt (including your spouse if applicable) you can handle with a 36% ratio by multiplying your monthly gross income by .36, which will give you your total allowable monthly payments. After getting the product, add all other existing loans and payments. This will give you your total monthly debt payments. Finally, subtract your total monthly debt payments from your allowable monthly payments. The answer will be your maximum mortgage payment. You can then make a sound decision of what you can or cannot afford. In addition to doing the math, keeping your self updated with current mortgage rates and canvassing for lenders with low mortgage rates should be kept in mind always.

Look for a trusted and government certified home loan company that can provide your mortgage needs. Try Marimark Mortgage LLC. They serve the states of Florida and Virginia.

How to Get Equity Loans Fast

Getting an equity loan is fairly easy nowadays. Many lenders are offering equity loans online that are presented to homeowners with credit problems and so forth. Still, few lenders expect a credit rating around 720; however, few lenders will accept applications from borrowers with lower credit rates. The downside is that the borrower will not receive discounts offered in some loans for outstanding credit ratings, nor will they receive the lowest interest rates or monthly installments.

Still, home equity loans can be of good use if you are paying high interest on secured loans or credit cards. The loans often roll the interest rates into the loan, converting them to a lower rate. It depends on lender and type of loan, but various loans offer rewarding options, while other loans present higher risks. Thus, when searching for equity loans you want to consider all options.

E-Loans are a sort of equity loan that helps borrowers to save. Thus, the E-loan combines “credit scores” with the loans helping the borrower to find a way out of paying high interest. Many lenders offer E-loans that roll the fees and costs of the loan into the monthly installment, thus reducing the cost for the homebuyer. Other types of loans focus on the same principle; however, the lenders may toss in clauses or penalties. In other words, the lender may feel that offering you a great choice presents a threat and will incorporate penalties and clauses in the agreement.

It sounds wacky; still, this is how few lenders work. The penalties may stipulate that if the borrower pays off the mortgage loan earlier than the term agreement, then he may be forced to pay off the first loan in addition to paying off the second loan. Thus, read and learn before considering equity loans.

Secured Loans - Cashing In On Rising House Prices

Look in any estate agent's window and it becomes clear very quickly how much house prices are rising across the UK. But that can be a real advantage to a homeowner looking to raise some quick cash - perhaps to consolidate credit card and other debts or to embark on some home improvements.We're talking secured loans here, of course, perhaps the easiest form of loan to obtain.That's because security for the loan is provided by bricks and morter - your home, in other words.And because there are so many lenders willing to provide such loans, because the borrower is offering bricks and morter as security, some really competitive loan rates are available.The secured loan takes advantage of the equity which may be locked up in the value of a home. For example, a home bought for £60,000 (via a mortgage) may, years later, be worth double the purchase price or more because of the steady, increasing rise in house prices.And it's this difference in value then and now, known as the equity, which allows the homeowner to borrow against and which is attractive to the lender.

The loan may be provided by the lender of the original mortgage. Or it may be obtained via a second mortgage, through a different lender. The homeowner could also obtain a remortgage, for a larger amount.No matter by what method the secured loan is obtained, if the homeowner defaults on repayments, the lender can repossess the property and get back the money borrowed.And of course the lender providing the original mortgage has a legal first charge.This means their claim has priority over the claim of any subsequent lender involved.As such, because of the perceived increased risk, the rates offered by the second lender will usually be higher.

So how much can you borrow? Depends on the equity. What sort of terms are available? Anything from a few years to 10, 20 or more years. What rates can you expect? Somewhere around 6% to 7% is fairly common.But it all depends on your circumstances - and everyone's situation is different.Talk the matter over with an independent financial adviser first before taking the plunge.