Your Questions About Home Loan Rates

Mary asks…

What is the best way to get a home loan when you are getting divorced?

Soon-to-be divorced mom of two would like financial advice on the best way to get a home loan. Never been a part of the financial end of matters and serious advice would be appreciated.

John answers:

There are many factors to consider. But first I would wait until after the divorce. Not sure what state you live in – but with a divorce – You do not want him to have his name on any of the paperwork,etc. When a Lender or Broker takes the 1003 (Loan application) they can put on there “seperated”, but underwriting would want the divorce decree, and sperate maintage agreement if there is child support. You do not need to list child support on a loan application – unless you need it to pay for your mortgage, and to keep your DTI (debit to loan ration) down. Do you have Job time? Lenders look at a 2 year history. If not, a letter of explination will work, since you are coming from a divorce. But lenders need to know how you plan on paying for a loan.

Other things to consider:

Decide on how much you want to spend, if you want to escrow the taxes and insurance. Say the taxes are 1200 a YR and insurance 800 a year (just an estimate, ok) That is 2,000 a year divided by 12 = 166.66 If you paid 1,000 a month now – (166.66) your P/I Principle and Interest would be 833.34. Now you decided on the price range you are looking into. If you have great credit, a 1 loan at 130,000 at a rate of 7 percent over a 30 year time would be 864.89 – This is just a estimate – ok –

It greatly depends if you need help with closing cost, (The seller could do Seller Help toward your closing cost). If that is the case, I normally tell my clients NOT to hackle over the price, since you are asking for closing cost help – especially if the home is thru a realitor, and the seller has to pay the realitor their fee which runs from 3-6 percent of the selling price, and you ask for 3-5 percent toward closing cost -assistance) Follow me so far??

Talk with a broker, a broker underwrites for many company’s (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a “hard” pull and it drags down your credit score.

Try to find someone (broker) that will pull your credit one time, and submit your loan application to company’s that will go off his credit report. By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). This will tell you the up-front closing cost (etc) associated with your loan. This is a estimate only – not the final – but it does help you figure things out.

Good Luck, and if I can help in any way check out my web site, for links to all the credit reporting agency’s and other useful information.

Ruth asks…

What is the best place to go for a home loan?

Should I: a) open an account at a credit union and apply for a home loan, b) apply for a home loan through my bank, or c) go to one of those “everybody approved” loan places? How do I shop around for the best loan for me?

John answers:

Start with your bank. If it is just rates that you are about, they are usually posted. Typically, credit unions may be lower, but not always.

Good luck!

Susan asks…

Is there a statute of limitations for corrections of clerical errors made after the closing of a home loan?

If corrections are made to your home loan after the day of closing, is there a specific time frame that the lender has to make those corrections and have the documents re-executed in order to transfer/sell your loan to another company?

John answers:

Nope. My parents’ lender told them the house payment was lower than it actually was, and that’s what they paid for 3 – 4 years. When it came to light that they hadn’t been paying enough, not only did they have to start paying the higer price, but they had to immediately pay what was overdue.

This was not an adjustable rate mortgage – it was the lender’s error.

James asks…

would my Mobile phone bad credit rating affect my home loan application?

I have a bad credit rating with 3G for about 4 years already, due to I hadn’t paid off my bill on time and my plan was cancelled. I have already paid off all outstanding amounts and penalty in 2005. (the total outstanding amount was about $100 dollars)

If I want to apply a home loan with any bank, would it be affect by my mobile phone credit rating?

John answers:

~~Yes it could. You have to know your credit score to know for sure. Right now the lending process for home loans is so stringent and difficult, people with very secure jobs and high credit scores are still having an extremely difficult time getting loans approved ( I just talked to my uncle about this, and he is a real estate broker). So the best thing to do is go through a lender and get pre-approved for a home loan to know where you stand.~~

Helen asks…

Can a fixed home equity loan drop my credit score?

I requested $10,000 dollar home equity loan to roof my house.
My FICO score was 780 until approx March when I applied for a home equity loan at a fixed rate. Now my FICO score is 740. What happened? I am never late on any payments. I pay over the minimum amount do on my card every time.

John answers:

There are a number of factors that go in to the scoring model and on time payments is a major one, but not the only one.

Having a new account can be a risk factor all by itself. Since it is a closed end loan, the balance is near the limit and it has probably only just started reporting.

I wouldn’t freak out or anything. A 740 is still pretty darn good. My scores boucne around with little rhyme or reason.

Sometimes opening a new account can have a positive affect. I went to Home Depot to buy $300 worth of windows and walked out with 20K in new credit. Having the additional available credit had a very favorable affect on my scores. I don’t have to use the credit if I don’t need to.

Also, if you have a balance on a credit card that is more than 50% of the limit, you may want to pay it down or transfer some of the balance to another account so that none of your balances are over 50% of the limits.

Again, a 740 is a great score so you really don’t need to be worried about anything and it will probably go back up in a month or two once the new loan is a little more seasoned.

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