Potential homebuyers are always cautioned to be aware of mortgage lending standards and the difficulty they might face when trying to obtain a mortgage. Credit availability is expanding, making it easier to get a mortgage now than it was a year ago. The market is still tight however, and homebuyers should be prepared to shop around until they find a lender who is offering something that will meet the needs of their family.
Mortgage lending companies have high standards so it is important to make sure you and anyone else who will be included on the mortgage have their credit in check. The mortgage market is strict because lenders do not want to be put in a situation where they are forced to repurchase loans that are not paid on. They also do not want to end up in a litigation situation due to loan issues.
What Has Happened to the Number of Mortgages?
Due to the strict nature and requirements of the lending companies, the number of mortgages given out has significantly dropped. A report by the Housing Financial Policy Center at the Urban Institute showed that about 6.3 million fewer mortgages were given out between 2009 and 2015. The reasons behind this statistic are strict regulations and policies. These mortgages would have been granted if the lending standards where more reasonable.
Mortgage companies rely on calculations to determine if a home buyer will become delinquent on their payment. They will not give you a loan if you are too much of a risk for them. Credit history has a huge impact on this decision since lenders can see how often you pay back your debts. The history they receive is extensive. This view into your financial past causes lenders to take less risk when lending to you for your mortgage....
It is easy to become overwhelmed when you enter the home buying market. Friends, family, colleagues, and even acquaintances will give you their opinions if you are a first time home buyer. While most of them are looking out for your best interest, they are not fully aware of what is happening in the housing market.
It is important for you to be prepared and have your own questions ready. No matter what other opinions you are getting, you are the one buying the home and your comfort level will help make your final decision. Here are three important questions to ask before you purchase a home.
1. Why am I Buying a Home?
Regardless of the finances, it is important to think about what made you want to buy a home in the first place. Usually the reasons don’t have to do with money. Instead, home buyers are focused on how the house will impact their family in the future. A study done by the Joint Center for House Studies at Harvard found there are four reasons people buy a home. Those reasons include schools for your children, a safe environment, more room for your family to grow, and control of your own space.
These factors are the most common reasons people look to buy a new home. When you ask yourself why you are looking to purchase a home, do any of those factors come up? Spend time with your spouse or family members who are involved in this decision and determine why you want a home in the first place. Creating this list will help when searching for a home and can help your real estate agent find the best home for your needs.
2. What is the Trend with Home Values?
Our current economy and housing market is strong. That means home values and mortgage...
There has been some discussion recently on home prices in relation to mortgage rates. Some believe if there is a rapid rise of mortgage rates, home prices should decrease. Logically it makes the most sense for the price of the house to drop when interest rates are rising, but this is not always the case.
This theory of home prices decreasing is typically discussed by future home buyers. As a buyer you would like to think if you are paying higher rates on your mortgage, you should be able to see a decrease in cost somewhere else. Unfortunately, these rates are rising because the economy is in better shape. As the economy succeeds, incomes rise, rates go up, as well as the price of the home.
A recent study by the John Burns Real Estate Consulting found mortgage rates have very little impact on the cost of the home. The housing market and price increases are affected by things like job growth in the area and rising wages. Coincidentally, these same factors are causing the rise in the mortgage rates since people can afford to take out more.
As the economy progresses and strengthens, mortgage rates and home prices will fluctuate. It is a misconception as rates increase, home prices will decrease. Advances in the economy have shown that rates and home prices are more likely to increase together.
One of the benefits of owning a home over renting is the various tax breaks offered to home owners. But what exactly is deductible?
The most common tax deduction among homeowners is the interest paid on mortgages. "It's evolved over the last 10 years, but we now have a cap of $1.1 million in mortgage debt that we can deduct for tax purposes," said Monica Rebella, a certified public accountant in California, in a USA Today article. These full interest deductions are also attainable on second homes with a mortgage, so long as the total deduction among all the mortgages is less than $1.1 million.
The biggest concern to be cautious of is making sure any equity being taken out is directly used to improve the house or it isn’t deductible. "If you refinanced your loan and decided, 'Hey, why don't we take another $50,000 out in equity,' but then you don't use that money to, say, build a pool, that's not fully deductible," Rebella said in the article.
The second large tax deduction associated with owning a home is property taxes. The taxes paid during monthly loan payments go into an escrow account for payment once a year, according to Bank Rate. The escrow account balance should be given in an annual statement from the loan lender, along with other loan interest information. Both of these are deductible for the entire time period...
Credit is similar to any relationship that is built on trust. In order to maintain a good relationship, both parties must maintain mutual trust. Once that trust is broken, it takes times to rebuild. The best action to take in both instances -- relationships with friends and relationships or with creditors -- is to simply refrain from breaking the trust. It is essential to maintain a good credit score in order to make purchases for instance homes. There are several steps you can take in order to maintain good credit and good relationships with your creditors. The best way to fix credit or maintain good credit is to:
- Know Your Numbers
- Monitor Spending
- Keep Credit Limits Low
- Pay AT LEAST The Minimum
- Pay On Time
- Montior Your Credit
- Find A Way To Establish Credit
Here is more detail on the suggestions above…….
1. Know Your Numbers
A doctor tells patients to know their numbers--blood pressure, weight, etc. As with physical health, individuals should know their fiscal numbers in order to maintain good fiscal health. The first question to ask is, “What is my credit score?” This is especially important if you are considering buying a house. The next question is, “what credit score do I need to buy a house?”
2. Monitor Spending
Check weekly to reconcile accounts. Check online statements to ensure that unauthorized charges have not been made. Inspecting accounts more frequently will help decrease unnecessary spending.
3. Keep Limits Low
Because credit is...
Picking up the pieces of your financial life after filing for bankruptcy can be immensely difficult. Getting any kind of credit built back up is an arduous task that takes years, but having that credit is absolutely necessary when it comes to massive undertakings like getting a mortgage. The good news is that if you give yourself time and follow the necessary steps, some of which are listed below, you’ll still likely be able to qualify for a loan to move into your dream home.
The first step is rebuilding your credit, which is no small task. Rebuilding credit from nothing easily takes years, sometimes even decades depending on your financial situation. The biggest step is immediately paying your bills on time. Bills don’t disappear, and even the slightest mishap concerning them will ding your credit. The next task is to actually use your credit card—but only have one. Try to ensure you don’t put more on the card than you can pay off in full throughout one billing cycle. Even if you’re not able to pay the entirety of a credit card balance, be sure to always pay the minimum amount required. Another option is to use secured credit cards, which has a limit tied to the amount in your bank account. This will help your credit improve and increase the confidence of lenders that you can be financially responsible. Finally, don’t forget to check your credit rating at least once per year. In the U.S., credit reports are maintained primarily through three organizations, Experian, Equifax and TransUnion, and these companies are federally mandated to give you ...