Young, Self Employed, No Accounts And No Savings. How

Young, Self Employed, No Accounts And No Savings. How Did I Get A Mortgage?

I was having considerable problems getting a mortgage to buy my first home about four years ago. If I was to believe everything I had heard, I was the ideal candidate for a mortgage – young, a first-time buyer and with an annual income of about 30k. Easy!

No, not easy, actually. Being young with a leaning towards enjoying myself, I had no savings – nothing to use as a deposit. But what about these 100% mortgages I had been hearing about? Surely I qualified? Oh, there was something else – I was also self employed with no accounts.

Self employed with no accounts and no savings.

Could I get a mortgage? It was virtually impossible. Not a single High Street lender would give me a mortgage. Even my bank who have had my services for ten years turned me down; even though my bank knew exactly how much I earned each year and how much I spent each week; even though my bank knew that making the monthly payments on a repayment mortgage would not be an big problem for me.

Then I heard about Self Certification Mortgages.

What is a Self Certification Mortgage? It’s essentially a mortgage whereby you decide whether or not you are capable of making the repayments. And that is when the penny dropped, because you see the entire process of applying for a mortgage is premised upon an institution (such as your bank) deciding whether or not you are able to make the monthly repayments.

And what is the formula for working this out? Well, if you are employed it is your salary – a bank will lend you, say, 3 or 4 times your annual salary. Normally they will ask you for a small deposit, say 5%, to demonstrate that your intentions are serious.

Obviously, if you are self employed, and particularly with no accounts, you often do not have an annual salary and you are unable to demonstrate regular monthly income. Many self employed people – notably me – live hand-to-mouth, regularly waiting for reluctant clients to settle outstanding invoices. So how can your ability to repay a mortgage be judged? I discovered that self certification was the answer – i.e. YOU. You make a judgement as to whether or not you are borrowing too much money and whether or not you will be able to afford the monthly repayments. After all, if you are bright enough to run your own business, manage your own tax affairs, handle purchasing and invoicing, surely you are bright enough to work out whether you can repay your mortgage!

Think about it – conventional, salary-based mortgages are judged on the basis of what a person has earned in the past, but a person could be made unemployed within hours of securing a mortgage. On the other hand, Self Certification puts the onus on you predicting what you will earn in the future. Sure, you could go out of business, but a salaried person could also lose their job.

So I thought, well this is good, but I bet that a Self Certification Mortgage is the stuff of loan sharks, with huge interest rates, crushing monthly repayments and Guantanemo-style penalties.

But there was something else I discovered about mortgages. Although the High Street is swamped by lenders, there are only actually a very small number of ‘actual’ lenders: the majority are intermediaries acting on their behalf, because the number of mortgage applications is so great that intermediaries are required to perform the process of judging each applicant and assessing risk.

So I discovered that whereas a High Street lender would turn me down, a smaller lender might accept me. But get this: the mortgage that I actually received from the small lender at the end of the day was exactly the same as the mortgage which had been refused me by the High Street lender! Only the forumla for judging my ability to repay the mortgage was different, not the mortgage itself!

So what’s the catch with Self Cerftification? There is always a catch in my experience, and in this instance it was a very big catch. Whereas a regular mortgage requires the borrower to contribute a deposit of, say, 5%, my Self Certification Mortgage required a deposit of 15%. Fifteen percent!! Of course I can see why they ask for this, why if you are not being judged using the conventional formula you are expected to show some serious committment. But I didn’t have any savings. I was young and self employed for crying out loud.

So what did I do? Okay, I would not recommend this to everybody, but I was desperate for my own home and I knew that I could afford the repayments. I took out a Personal Loan shortly before my mortgage application and, supplemented with a timely invoice payment, I was able to pay the deposit and afford the key refurbishment costs on the property (roof, re-wiring, plumbing etc).

On the High Street this would be called a Home Improvement Loan and acquired AFTER you have obtained a mortgage and purchased the property. I simply borrowed a little more in the form of a Personal Loan before I had acquired a mortgage. I was fortunate in that I could afford to carry the costs of these repayments for the forseeable future and I had bought on a rising market – the value of my property was already more than the mortgage and personal loan combined before I had even finished the refurbishment (ie. 4 months after buying the property). I would not recommend this to everyone, and you have to be very, very clear about how much you are borrowing and what the total repayments will be.

However, getting on the property ladder and having my own home was the most important thing to me, and it just goes to show that if you look beyond the High Street you can actually find the same or similar financial products but with less of the hassle. The High Street had always made me feel inadequate, a financial failure

You might be interested to know that, because I was still looking for the catch in my Self Certification Mortgage, I went to a respected, independent financial advisor recently (on the High Street as it happens) and asked if I should change my mortgage to something better. His advice was that I had got a very good mortgage deal and that I should stick with it for the forseeable future. So I have.

Richard

Why you’re probably not getting the best mortgage rate quote?

Why you’re probably not getting the best mortgage rate quote?

A loan is basically a product and like all products, its sales pitches can be exaggerated. The end result is that you end up with a loan that may not suit your needs at all. When shopping around for the best mortgage rate that is most suitable for you, one needs to be highly discerning with exactly what is being offered.

Short-Term Adjustable Rate
Many consumers make the common mistake of choosing a one-year adjustable rate mortgage due to the deceptively low rate being advertised. Deceptive, because, in the very next year, the rate shoots up.

It is most important that you keep in mind that it is not in the best interests of lenders to offer you a loan with the lowest possible interest rate. Typically they would prefer you to opt for the highest rate you could possibly afford. Doing so will ensure that in addition to their regular commission, mostly one percent of the loan amount, an overage of an extra one or two percent is earned for selling you a loan priced higher than the most favorable deal for you. To avoid this situation, insist on the daily rate card from your loan officer that lists the lowest rates of all his products.

Regulation Offers Some Protection
The Real Estate Settlement Procedures Act (Respa) lays down that lenders must give an accurate estimate of closing costs at the time of submitting your application. Extra charges are in violation of the law. Nevertheless many banks often try to slip them in. Insist on a detailed list of closing costs. If you find any suspicious or unnecessary charges, you have the right to ask your loan officer for an explanation.

While it may be advisable to seek recommendations for mortgage lenders, you need to be careful if the advice comes from a real estate agent. With estate agents, it is more likely that instead of referring you to the best deal possible, they send you to the lenders who pay them a commission for doing so.

Mortgage brokers will often mislead you with pre approvals. They lead you to believe that a pre approval practically guarantees you the mortgage. However, at the actual time of getting approved for a mortgage, these pre-approvals are of no value and may as well be wastebasket approvals.

The Government has made efforts to ensure protection for the consumers with government mandated disclosure forms. However the miniscule type combined with complex financial figures can be difficult to read or comprehend easily. Even worse, it can be use to conceal the truth just as it can reveal it. Overall, make sure that when you are selecting your quotes, you keep in mind that opting for what appears to be the cheapest quote initially, or depending completely on the recommendations of the lender are not good strategies with seeking out the right mortgage for you.

Why Mortgage Rates Rise When the Fed Cuts Rates

Short term loans like car loans, credit cards and home equity loans are automatically lowered with Federal rate cuts because they are based on the Prime rate. Longer term loans such as mortgages arent because they are based on competing investment options, for instance investing in stocks rather than real estate.
When the Fed cuts rates the stock market takes it as an all is well signal, making stocks a more appealing investment. This causes money to be removed from the mortgage backed securities and bond market and put into the stock market, thus lowering the demand for mortgage backed securities and bonds.
Now the companies that issue bonds and mortgage backed security investments raise the rates to entice investors back into the fold with higher yields, essentially higher rates. Since the yields are rising, so must the rates on the underlying mortgages.
If yieldsrates rise on mortgage backed securities then the actual rates on the underlying mortgages must also rise. That is why mortgage rates can rise when the Fed cuts interest rates.

Why do some people always seem to get a mortgage

Why do some people always seem to get a mortgage and others dont? NEW secrets revealed

Imagine how hard it can be to get on to the property ladder, many buyers are finding it increasingly difficult the latest figure from the national statistics shows that people are really struggling.

So how comes some people do not have these problems we have found it really strange and decided to investigate further.

what we found was amazing

England’s leading expert has been helping first time buyers and homeowners get their Mortgage. Yellow mortgages at http:www.yellowmortgages.com has been secretly getting clients a mortgage when others could not. For legal reasons this mortgage information is confidential and can not be revelaed in this article but this “NEW cutting edge expert has certainly proved his worth and although he is expensive the results prove he is worth every penny” said jenny from lancaster

Where Mortgage Leads Come From

If you are a loan officer or mortgage broker, and you are considering purchasing mortgage leads, one thing that will be important to know, is where these lead companies obtain their leads from.

Many times, mortgage lead companies will sell their leads multiple times. They have a data base of thousands of leads that they sell repeatedly over and over.

Or, they buy leads in bulk from third party vendors and sell them at a profit.

This is known as recycling leads, or selling junk. And who knows how many times that third party vendor sold their leads to other mortgage lead companies.

By the time that lead lands on your desk, it has gone through the hands of literally dozens of loan officers.

Your best bet is to deal only with mortgage lead companies that own and operate their own mortgage lead generation sites. This way at least you now that there is an excellent chance that the quality of the lead will be good.

How can you find this out?

Call someone in the customer service department of the company you are considering. Dont be shy, come right out and ask where and how they obtain their leads.

If you are not satisfied with their answers, than move onto the next mortgage lead company.

Remember, if you are not happy with their customer service, than more than likely you will not be happy with their leads.

When To Start Seeking A Mortgage For A New Purchase

When To Start Seeking A Mortgage For A New Purchase

You have made the decision to buy a home and start looking at properties. Before you get rolling, you should start trying to find the best mortgage option for your situation.

When To Start Seeking A Mortgage For A New Purchase

Most people begin shopping for a mortgage at the last minute and settle for the first offer they get. This is an absolutely terrible thing to do. A house is one of the most important things you will ever be able to own and getting a mortgage on that house, or, more correctly, getting the best mortgage possible on that house is only too important. The only way you will be able to find that perfect mortgage is to shop around.

Obviously, this means that you should begin looking as soon as possible. Dont wait until the last minute to search for mortgage options, rather leave yourself as much time as possible to go through as many lenders as you can and see what each has to offer. Every lender is different and will provide different plans with different rates and different things tied to those mortgage plans. You need time to go through all of these different offers and sort out the good from the bad. If you dont have perfect credit, use a mortgage broker to find the best deal. This is all they do, so they can give you a huge head start.

If you wait until the last minute to find a mortgage you will be forced to settle on one early and can end up costing yourself tens of thousands of pounds in the long run. One percentage point of interest might seem like a small amount, but when that one percentage point is used on a mortgage of hundreds of thousands of pounds based over 20 to 30 years, that one percentage point can end up equaling tens of thousands of pounds! That money is all interest that is being paid to the lender. You have better uses for your money, dont allow a lender to take more from you than he has to. Shop around and find the lowest interest rate and best mortgage plan possible.

It is advised to begin shopping for a mortgage as soon as you decide that you might be interested in purchasing a home. You dont have to get too serious, but check out the major banks and lenders that you know of to start with. Lay some groundwork and get some feedback. Start making some goals of how much you will need and what sort of interest rate you want. It is highly advisable to get pre-approved for a loan if at all possible. Keep these things in mind and shop around to find the best plan possible.

What to Look for in a Foreclosed Home

The first thing you should look for or look forward to – is weeks and even months of diligent research. The opportunities in foreclosed homes often fall into the old adage, If something sounds too good to be true, it usually is. What is true is that some foreclosed homes will sell at 30% to 40% below market. But according to the editor of one real estate investors publication, Most foreclosed homes sell at 5% below market.

Location

If the foreclosure opportunity youre looking for is an investment opportunity, then you would be wise to review five years or more of real estate sales history in the area. Have the homes appreciated sufficiently to make your investment risk worthwhile? The property doesnt have to be in an exclusive neighborhood, but it should be in an economically stable area. This is not an issue of who is moving in and who is moving out, but rather how much is being paid for the homes changing hands.

One recently introduced factor to consider if youre looking in the Southeast is the cost of homeowners insurance and coverage for windstorms. You might find some real bargains in Hurricane Lane there, but also find yourself buying a house you cant afford to insure. You will also find areas where flood insurance is simply no longer available.

Physical Condition

Consider the circumstances of a foreclosure. Most people lose their grip on their homes after struggling to meet mortgage payments for an extended period of time. That probably means the home has received little or no maintenance, and the property youre inspecting may appear to be in poor shape. If its in a quality location however, ignore the condition for the moment, take note of the obvious signs of deterioration, and incorporate rehab costs into your calculations.

Analyze the Competition

Keep in mind that just as in any commercial real estate market, you are bidding against professionals. There are people in most areas who make a living from buying foreclosed properties, cleaning them up and putting them right back on the market. Professionals operating in that fashion may not be willing to bid up near market price for the neighborhood, but with any well located property youre not going to walk away with a steal. Take a look at recent foreclosure sales in the area and see if you can find a pattern in the successful bids how far below market are they?

Clean Title

With any foreclosed property you need to look closely at the condition of the buildings title. Check to see if there are any liens on it other than that of the lender who is selling it. If you can, determine if the former owner is embroiled in any lawsuits that could conceivably lead to a challenge of the sale and tying up the property. In theory, once a property reaches the foreclosure stage it is going to market unencumbered. That means nothing to an attorney who sees opportunity in attempting to delay disbursement of the former owners principal asset. Delay is the operative word here; if youre going to invest in a property you need to be able to put it to work for you with dispatch.

What the bank won’t tell you about your home mortgage

What the bank won’t tell you about your home mortgage quote

Shopping for a house is probably the most significant financial decision that you will make in your life. When you shop for your home by first attaining a home mortgage quote, your decision becomes even more momentousyou need to perform a balancing act between the house of your dreams and factors such as the down payment and interest rate payable.

Your first stop in this process will probably be your bank. This is the most obvious option, but may not always be the right one; there are things your banker will not tell you about a home mortgage quote. In other words, the home mortgage quote that is good for your banker may not be the best one for you.

Prevailing interest rates

Take the issue of interest rates. Rates fluctuate according to market exigencies. When you start your negotiations for a home mortgage quote, the interest rate might be higher than at the time you actually avail the loan. You must keep a track of such fluctuations, and induce the bank to provide you with the advantage of the prevailing rate. Your lender may not tell you this, but the difference could mean several hundred extra pounds. Therefore, it is always a good practice to consider alternative information sources before finalizing the home mortgage quote, and then compare rates on offer. With easy access to the Internet, you can even generate online quotes from web sites. This exercise will help you prepare well for negotiating with your banker regarding the interest rate.

Mortgage tenure

The mortgage tenure is another important question that you need to query. From the point of view of the bank, a 30-year fixed rate is most suitable because it can bring in returns of up to 4-5 percent for the bank. However, is it good for you? If you are looking to refinance in a period of about seven years, a 30-year rate is a disadvantage because you would be keeping the loan for only seven years.

Hidden fees and levies

Once you have finalized the purchase of the house and the interest rate with the bank, you would think that getting the right home mortgage quote is guaranteed. However, you need to watch out for those hidden fees or add-ons, which your banker might not have explained at the outset: loan processing fees, warranties, insurance, and the like. It always pays to put these issues on the table before finalizing the home mortgage quote.

Disproportionate service charges

In your market research for the right home mortgage quote, your focus is obviously the lowest interest rate. However, this should not be your only guide because some banks attract customers with the offer of a low rate, but may levy charges for services that are non-existent. A real-world experience is of a Fairfield, Conn., graphic designer who discovered that his bank charges fees for services such as lender inspection and notary at a rate much higher than normally acceptable. It is a prudent step to compare the complete fee package before committing to a quote. It is important to remember that lenders often offer to waive a particular fee levied by your bank in an effort to close the deal. So, it is important to recognize such opportunities and press home the advantage.

Besides raising these factors, you must also consider issues that are more closely related to your personal decision-making capacity, and for which no banker can tender advice:

Be sure of the reasons for buying a house.
Ensure that the size of the house is right for you.
Choose the right time in the year to buy a house (there could be a particular time in the year when home prices drop, depending upon your location).
If you decide to involve a real estate agent in procuring your home mortgage quote, find the right estate agent and be aware of hisher commissions.
Select the location of the house carefully keeping in mind resale value.
Inspect the house thoroughly, identifying problem areas and factoring them into the price.

Getting a home mortgage rate that suits your requirement is one aspect, living with it is another. However, once you have understood the operating market forces in this arena, you will go a long way toward successful management of both these aspects.

Whats A Mortgage?

Buying a home is an exciting prospect. Choosing the location, the floor plan and finally sealing the deal. There is an important element that exists in most home sales and that is the mortgage.

Whenever you purchase a home and you dont pay the full price in cash, you have to obtain financing. This type of financing is a mortgage. When you take out a mortgage you are using the property as collateral. If you fail to repay the mortgage on the terms you agreed to, the bank or lending company has the right to take over possession of your property. Therefore its very important to choose a mortgage that will fit into your budget.

There are several types of mortgages available today. One of these is the fixed rate mortgage. When you take out a fixed rate mortgage it means that you are taking out a mortgage for a specific amount of time, usually 10, 15, 20 or 30 years. When you apply for the mortgage loan, you agree to an interest rate. This interest rate will be in effect for the life of your mortgage. Your monthly payments will be set and you will repay the lending company for the agreed to term.

Another type of mortgage is the adjustable rate mortgage. With this type of mortgage the interest rate applies for a shorter period of time. Once that time has passed, usually a year, the interest rate in effect at that time is applied to the mortgage.

If interest rates are fluctuating when you are considering purchasing a home, it is advisable to consider an adjustable rate mortgage. The reason is that if you lock yourself into a fixed rate mortgage and then interest rates plummet, youll be paying much more than you would have otherwise.

When you go to apply for a mortgage the loan officer will explain in detail the differences between the two kinds of mortgage. They will also advise you as to which one is better for you in terms of your financial goals.

If you are already a homeowner and are older there is another type of mortgage that applies to you. Its called a reverse mortgage. A reverse mortgage is when the homeowner wants to enjoy some of the equity they have already acquired in their home. Each month the homeowner is paid any amount of money. This money is charged interest. Once the homeowner passes away or sells the property, the bank takes the total of the reverse mortgage payments and any additional interest out of the proceeds of the homes sale.

This works very well for retired people who want to enjoy the rest of their live without having to worry about money. They are still able to live in their homes and at the same time, the reverse mortgage allows them to have the extra cash they wouldnt have otherwise.

Mortgages are essential to anyone buying a home and with some careful thought and consideration you can choose a mortgage that saves you money and allows you to own your own home that much sooner. Consult with a mortgage professional and with their advice and knowledge, youll have the mortgage you need.

What Is Mortgage Fraud For Profit?

The Story:
In 2007, Sally was having trouble keeping up with her mortgage payments, and by September, she received a foreclosure notice in the mail. A few days later, she was called by a man who said he could help. He said she could have a check for 40,000 to help pay her bills, and she wouldnt have to worry about foreclosure any more. Sally signed papers in late October at a title company in Maryland. She went home with a 40,000 check and started making her new house payments to District Properties in December. Nine months later, Sally started having trouble making her house payments again. This time, instead of a foreclosure letter, she received an eviction letter in the mail. Sally gradually realized that she no longer owned her home; she was simply a renter. In a panic, Sally called District Properties. The man who answered the phone told her that Subprime Mortgage Co. held two loans against the house, one for 264,000 and one for 66,000, but she could buy her house back for 360,000 three times the mortgage she had a year earlier. Sallys income and credit were not good enough to buy her house at that price. The man said, Im sorry and hung up.

The Profile:
Like hundreds of District residents, Sally became a victim of mortgage fraud for profit, sometimes called equity skimming. The scheme she fell victim to was orchestrated by a variety of people, including a mortgage broker, real estate agent, appraiser, investor, straw buyer, and bird dog. Each person in the scheme received a portion of the equity in Sallys house. In the end, Sally lost her house, Subprime Mortgage Co. foreclosed, and the group that orchestrated the fraud made more than 100,000.

This fraud is different from predatory lending, in part because Sally never made a loan. Predatory lending typically involves a single loan with extremely high fees and a high interest rate made to a homeowner or legitimate purchaser. Mortgage fraud for profit is typically a more complex scheme involving an inflated appraisal, falsified loan applications, equity skimming, property flipping, and sometimes identity theft. The borrower is typically a straw buyer, who never intends to occupy the house. The mortgage payment is paid by the investor, or a company controlled by the investor. Eventually, the investor stops making mortgage payments, forcing the lender to foreclose, or sells (flips) the house for additional profit.

In a typical mortgage fraud for profit scheme, a bird dog looks for distressed houses by checking public real estate records and driving around targeted neighborhoods. When a house is identified, the bird dog reports the address to the investor and receives 1,000 or so for the service. A straw buyer, who is a person with good credit or a falsely inflated credit score, poses as a buyer. In some cases, a straw buyer is a stolen identity; the person whose name is stolen may discover the theft when credit is denied or the purchase appears on a credit report. In some cases, a straw buyer is a participant in the scheme a professional straw buyer. In many cases, however, a straw buyer is a person who hears by word of mouth through family, friends or co-workers that someone will pay 5,000 to 10,000 for the use of his or her name. As with most financial arrangements that seem too good to be true, a one-time straw buyer often finds that things do go wrong: his credit may be ruined because the mortgages are not paid, he may be investigated by law-enforcement for fraud, or he may be charged with conspiracy.

In addition to bird dogs and straw buyers, a mortgage broker and appraiser are important participants in a mortgage fraud for profit. Usually, both are active participants in the scheme and receive money for falsifying documents. Other industry professionals who play an important role are employees of a title company who create closing documents and disburse funds after a sale is completed. Professionals who have access to credit report databases or software that generates W-2 forms and pay stubs also participate in the scheme. As reported in the 2006 FBI Financial Crimes Report, 80 percent of all reported mortgage fraud losses involve industry insiders. Perhaps this is why mortgage fraud for profit has become so prevalent throughout the country. A homeowner facing foreclosure is easily convinced by a professional mortgage broker, for example, that he should sign contracts that convey his house to someone else. People tend to trust professionals in the financial industry. This is one of the reasons that government regulations requiring financial industry professionals to maintain specific standards are so crucial for the protection of consumers.