Homeowners Can Look Beyond Credit Scores

“Home is a place you grow up wanting to leave, and grow old wanting to get back to.” - John Ed Pearce

A hand to hold onto and a heart to listen to you, is what we expect when we visit a lending company during financial crisis. The fear of denial lurks in our minds but a ray of hope takes us to lending companies expecting words of wisdom, empathy, guidance to give us a second chance.

Owners planning to refinance a home mortgage often face challenges, especially if they have low credit score, below 620. The common practice is to approve loans on the basis of credit scores. Doors are open for homeowners with high credit scores. However, for people with low credit scores, the scenario is different.

• Common Reasons for Low Credit Score

Some of the common reasons for low credit score are:

• Late or missed bill payments
• High level of current debt
• Bankruptcy or foreclosure
• Missed credit card payments
• Recently closed credit card

• Effect of Low Credit Score

Homeowners or people, who have lost their homes and wish to buy a new one, find it difficult to find financing when they have a low credit score. Lending companies reserve prime loans for applicants having high credit scores. Sub-prime loans are offered to people with low credit scores. The loans have low teaser rates, high fees and high prepayment penalties. However, the process is not as rosy as it seems. There are hidden facts that applicants are not aware of. Initially, the low teaser rates attract homeowners trying to minimize monthly payments. However, in course of time, the interest rate goes up. Eventually, homeowners who default on loans can lose their homes built with dreams, aspirations and toil.

There are some lending companies that believe in the philosophy of empathy, to help borrowers during crisis. With housing market recovering at a rapid pace, increase in household wealth can be projected. This will be beneficial in home mortgage financing. There are companies offering mortgage and lending options to help borrowers sustain the crisis. Instead of focusing on numbers, they take a customized approach to hear out the problem of buyers, get an idea about the current financial status of the borrower and offer a suitable plan to lead way to their dream home.

Homeowners or people aspiring to make an abode for themselves can look beyond the three digit number.

Lenders make a big difference when buying a home

When you think of buying a new home for yourself, there are mixed feelings of happiness and stress. Happiness because we know that a home is where families live and grow together, a place where bonds develop and love blossoms. The stress is about the complexities of home mortgage loans. Home-ownership is a serious commitment that lasts for many years. It is important that we manage our monthly installments in a way that we are able to make regular payments without any defaults.

On the one hand, buying a home is a symbol of security, and on the other it is associated with a sense of responsibility. At this instance, we need the assistance of a reliable lending company who can provide us with the understanding of loan procedures and payment details.

There are a few factors that must be considered carefully when you decide to buy a home:

• Added financial responsibility: Apart from the monthly loan installments, there are other expenses such as utilities, maintenance, taxes and insurance which are inevitable with the purchase of a home.

• Risk possibility: There is always a risk factor associated with such a significant purchase. Although the value of a property increases over time, there are chances that it may go down.

 • Lesser flexibility: As a renter, it is possible to shift to a new place at a short notice. However, it is very complicated to sell a home and move to a new one.

There are some lenders who earn the trust of their borrowers through their dedicated and caring approach. They act as a partner throughout the process and enable borrowers to make a planned decision by giving them information about the different loan options available. The experts invest time to figure out the requirements of the borrowers and provide them with the best solutions.

When we purchase a home, it is quite an accomplishment. It is part of the American dream. When we get assistance from a trustworthy lending company, buying a home becomes a much more manageable experience.

A new beginning after foreclosure

In 2008, the financial services firm of Lehman Brothers crashed and nearly 25,000 people lost their jobs. After this, the American dream of owning a home was shattered for many. It was the worst financial collapse since the Great Depression of the 1930’s and it led to a complete financial meltdown. What followed the crisis was widespread unemployment and foreclosure for many. It was a great setback for homeowners who were forced to give up their homes because they were unable to make their payments on their home mortgage loans. It was an unforeseen circumstance that came without warning.

For many, foreclosure is a painful reality because it is associated with one of the most important possessions of our lives – our homes. A home is more than a structure with four walls; it’s our dream, a world where our families can feel safe. In the case of financial hardships, when we have no other options but to accept a foreclosure, we feel broken. At this point, it is important to understand that foreclosure is not the end. With lending companies who care, there can be a new beginning in assuring the possession of a new house.

Usually, a borrower who has gone through foreclosure is supposed to wait for years before applying for home mortgage loans. There are a few lending companies who work with borrowers sooner with the aim of helping people get into a new home, even after foreclosure. Such lenders have the ability to walk in the borrowers’ shoes and understand their situation. Unlike other lenders who make re-entering the market difficult, there are some lending companies who try to figure out the circumstances of the borrower and work with them. In return, the borrowers invest their trust in them because of the lender’s interest in helping them start anew.

Not all lenders take the time to understand and identify the causes of previous struggles. There are a few, however, who possess the understanding and experience to deal with the emotions of people who face helplessness in times of hardships. The true separation between such compassionate lenders and their competitors lies in the reliability and determination to provide solutions that will last in the long run.

Buying a Home? – Find a Perfect Lender

Becoming a home owner for the first time is indeed the most cherishable moment in our lives. After all, our homes are not just structures, but a place where relationships blossom and happiness dwells.

However, amidst all of the excitement of buying a home for the first time, there are a few traces of apprehensions that we experience with respect to the most important aspect of purchase – the home mortgage loan. As a result, home-owners seek the services of a trustworthy lender, who can guide them with clear and concise details on how to navigate the mortgage process smoothly.

Lenders understand the little intricacies that are involved in a home purchase in context to the financial conditions of a buyer. They enter into a committed relationship with the buyer and provide sustainable home financing solutions with an aim to take away the excessive burden from the buyer’s shoulders and enable him to enjoy his valuable possession with peace and contentment.

We cannot deny that buying a home sometimes involves undue financial pressures. If we do not make a planned decision at the very beginning, we might face difficulties later. Professional lending companies are well adept to analyze and chalk out appropriate plans for buyers that are suitable for them in terms of payments and duration of the loan. The objective of their strategies is to ensure that a buyer can afford to make all of his payments on time.

Expertise of professional lenders The services of some lenders are unique in nature. The lenders try to analyze the need of borrowers and customize their solutions accordingly. Lenders assist borrowers with the following:

• Analyzing the situation of a buyer in detail
• Help a buyer in understanding every aspect of a purchase
• Assist a buyer in making informed decisions
• Ensure the well-being of a buyer

Having a roof over your head is a fulfilling experience and buying a home is one of the biggest financial decisions. With an overwhelming sense of responsibility, lenders make it easy for borrowers to make the right decision for themselves.

There is a Silver Lining Even after a Foreclosure

Buying a home is the most fulfilling experience; however, losing it is equally as devastating. It is a terrible feeling and we often take a lot of time to come to terms with such a situation. There are many reasons that lead to foreclosure. The more common ones are as follows:

• Unforeseen incidents
• Job loss
• Inability to refinance
The impact of a foreclosure is often overbearing. Besides the emotional implications, there is an immediate need to find a place to stay. Foreclosure is also accompanied with an unfavorable effect on the credit rating of a homeowner. It is a personal financial disaster and the individual must take time to cope with it.

However, once the finances are back on track and the borrower intends to buy a house again, the situation may not be in his favor.

Need to repair the credit history Borrowers have to reestablish a good record and it takes a long time to build up an ideal credit history. In normal circumstances, one must wait several years after a foreclosure to buy another house. However, there are some professional lenders who are empathetic enough to understand the definite reasons that led to the foreclosure. If the reasons depict the right intent of a homeowner, they can actually help him/her out to secure a second chance and buy a home.

For example, after the 2008 economic crisis, many people were rendered homeless due to job losses. This was a situation where these jobless people could not afford to make their regular home mortgage loan payments. However, they could not be held responsible for the crisis. In such circumstances, any conventional lending company would not consider the facts behind a homeowner’s inability to make timely payments. Instead, they would outright reject his loan application for the purchase of a new house.

There are some lenders who take note of actual facts behind foreclosure. They help borrowers to become proud homeowners again; they provide all of the necessary assistance that can help borrowers secure a new home through easy procedures. These lenders serve as support pillars to help borrowers sail through their financial crisis and gift themselves the priciest possession – a home.

Checklist For Borrowers Re-Entering The Market After Foreclosure

“Where we love is home - home that our feet may leave, but not our hearts.”- Oliver Wendell Holmes

More than a roof, more than a shelter, more than a structure on a plot of land; our homes are built with love and commitment. A home is a place where we learn the most, love the most and it’s a place where we can be ourselves. During financial instability, people struggle to secure their most important asset, their home. Due to unforeseen circumstances, sometimes people have to sacrifice the security of their homes, and when that happens it becomes difficult to recoup and come to terms with life. The emotional distress during foreclosure and the process of shifting from your own home to a rented apartment is painful.

When luck and circumstances are not in our favor, we must make critical decisions. Sometimes this means that homeowners have to step out of a home that promises love, security and togetherness. Apart from the distress and the pain, there are serious repercussions that come from home loss. Damage to one’s credit score is imminent and distressing. For this reason, the previous homeowner will have to wait two to three years before re-entering the market to buy a home again.

When people approach lenders to buy a home for the second time, several factors are taken into consideration. Those who are planning to re-enter the market after foreclosure should consider the following before approaching a lender for a home mortgage loan:

·         Job stability: People who fell into foreclosure due to job loss have to prove their job stability before re-entering the market. Lenders look for job stability before granting a suitable home mortgage loan.

·         Saving attempt: After a foreclosure, it is important to rebuild savings to prove financial stability and the ability to make monthly payments on time.

·         Attempt to improve credit score: It is a difficult and time consuming process. A foreclosure can drop a credit score by about 150 points. On-time bill payments and keeping credit card balances below the maximum level help to regain the lost score.

·         A valid reason for foreclosure: If a foreclosure occurred due to a justifying circumstance such as job loss or unexpected medical bills, then the waiting period for a new home mortgage loan can be reduced.

Most importantly, it is important to explain to lenders the exact reason for foreclosure. Accordingly, lenders suggest an affordable home mortgage loan. Lenders try to balance affordability and equity to offer a sustainable program that is beneficial in the future. Lenders work as partners and suggest loans that can be transformed into performing assets. 

Source Via: www.1stalliancelending.com

Homeownership – Fulfillment of a Dream

After spending five years pursuing my career, working hard and saving my money, I felt it might be time to take that first big step into homeownership. The idea of buying my first home was overwhelming and a bit intimidating, not understanding the process and all that entailed, but still my excitement about having my very own place and my interest in building equity for my future was winning out. 

This was going to be, what felt like, a true transition into adulthood for me. I felt that finding the right lender to guide me through the process was very important. I really needed a lender, who I could count on to educate and prepare me for all that was entailed in getting approved for a mortgage as well as help me make sure I was getting the right loan for me. As a first time buyer, I had little equity and knew I needed something sustainable that I could manage and maintain for the long term. This was not a small step in my life and I wanted to do everything right.

Significance of Home for First Time Buyers: 

For first time buyers, a home offers shelter, security and much more than that. Here are a few benefits of home ownership for new buyers:

• Emotional satisfaction: Home ownership offers emotional satisfaction. It ensures security, pride and fulfillment.
• Stability: When we rent a home, there is an element of uncertainty, whereas owning a home provides financial as well as emotional stability.
• Build equity: With monthly mortgage payments, homeowners build equity in their homes.
• Tax benefits: Homeowners get to avail tax benefits.

There are some lenders who offer customized solutions, taking several aspects into consideration. Job histories, salary, credit score, payment record and other aspects are taken into account before offering a home mortgage loan, and the whole picture is considered. Personalized service helps ensure you are getting the correcy and sustainable loan that fits your situation.

Source Via: www.1stalliancelending.com