GET A MORTGAGE WITH NOT SO PERFECT CREDIT

Some people believe that if they have had credit problems in the past, they will not be able to qualify for a mortgage. Some people believe that if they have had credit problems in the past, they have no choice but to get a high interest rate mortgage in order to buy a home. While there is some truth to both statements, there are also many misconceptions lumped into them.

 

Mortgages can be categorized into a couple of categories. There are the A Paper lenders and the B through E Paper lenders (commonly called B/C for short.) A Paper lenders or mainstream lenders make loans to the good credit borrowers. B/C Paper lenders or subprime lenders make loans to the rest of the population. A mainstream mortgage is considered the lowest risk mortgage, while a subprime mortgage is a higher risk mortgage. Mainstream mortgages have the lowest interest rates, while Subprime mortgages have the higher interest rates.

There are many issues with a person’s credit history that can be tolerated by mainstream mortgage lenders. However, there are credit issues that won’t fit with mainstream lenders and when this is the case, the options for the consumer become slimmer. However, before you decide not to pursue a mortgage or before you decide to pursue a high interest rate mortgage, get the facts.

KNOW WHAT’S ON YOUR CREDIT REPORT
The first thing you should do is get yourself a copy of your credit report. There are three different credit reporting bureaus and they can all have different information. Therefore, it’s in your best interest to get a copy of each of them. You can request a copy from each bureau through the mail or there are many different web sites that you can visit and download your report. There is normally a fee with all of these options.

Equifax 1-800-685-1111
Cost: $8.00
** One copy is FREE if you have been denied credit, employment or benefits due to your credit and can be requested over the phone.**

Experian 1-800-682-7654
Cost: $8.00
** One FREE copy per year (can be requested over the phone)**

Trans Union Corp. 1-800-888-4213
Cost: $8.00
** One copy is FREE if you have been denied credit, employment or benefits due to your credit and can be requested over the phone.**

All of the credit report links in my LINKS section provide the service of credit reports on-line. Also many of the rate shopping sections provide this service (pretty much through the same links I’ve provided.)

CREDIT PROBLEMS AND THEIR AFFECTS ON MY MORTGAGE APPLICATION

Financing Is Key to House Flipping: A Good Mortgage Broker on Your Team Adds Thousands to Your Profit

One of the keys to success in flipping houses is buying right. As one adage goes, “You make money when you buy, not when you sell.” The point being that if you pay too much for a home to begin with, it’s that much harder to profit on the sale.

Most of the time when a good deal comes on the market, you’re going to have competitors trying to buy it as well. All other things being equal, whoever offers to pay the most wins.

But all other things are not always equal. One of the competitors may be a professional real estate investor with a track record of closing purchases on time within two or three weeks of opening escrow.

If the seller is in need of a fast sale and the other potential buyers don’t look strong, the seller could accept a lower offer in exchange for the confidence the sale will go through on time. You can be assured the pros will use this to their advantage during negotiations. When you’re buying, you want to be that pro.

In other cases, opportunities may come up that haven’t yet been publicized. If you find one and can make a qualified offer quickly, you may not even have any competition driving the price up.

The key to acting quickly is having a good mortgage broker on your team. And by the way, if you’re going to be active flipping houses, you’ll have a team of people you work with on a regular basis, your mortgage broker being one.

Having your very own mortgage broker provides you with several advantages. First, you’ll be prequalified with your broker who can rapidly provide you with a Certificate of Loan Pre-Approval (or similar document) to submit with your offer to purchase. Ordinary buyers you’re competing against will likely not be able to demonstrate their financial strength so quickly and confidently.

If you do have the financial qualifications, it’s not difficult to attract a mortgage broker to your team. Most mortgage brokers’ clients don’t represent frequent business since the average homeowner buys a house only once every five to seven years. If you’re potentially taking out home loans on flipper houses once or twice a year or more, you’re a very valuable client. A good broker will strive to earn your repeat business by finding you the most favorable terms available and being sure your loan is funded quickly.

With access to numerous lenders, a good broker can take advantage of special terms a particular lender may be offering that can be advantageous to whatever situation you’re facing on a particular property. Minimum down payments, lower points and fees, preferred rates, interest only or deferred loan payments (and certainly low-or-no prepayment penalties) are among many loan features the broker can shop for you. Finding you the most cost-effective loan for your purchase helps build more profit in your deal.

Good brokers are also motivated to use their connections to be sure funding your loan receives top priority from the lender. This builds your reputation as a pro and reduces your headaches in getting the deal closed.

How do you find a good mortgage broker? References. Real estate agents often have worked with many brokers and possibly with other real estate investors. If you ask around and start hearing the same name come up several times, you may have found the right person for your team.

Next is establishing a relationship. Ideally, you’ll do this a month or more before you anticipate making an offer on a property so that you and the broker have a chance to research and become comfortable with one another. You’ll be interested in contacting references from lenders and other investor clients, and the broker will want to verify your credit history and financials.

If you’re both comfortable proceeding, how each of you performs in the other’s eyes during the first few transactions will pretty much define your relationship. Hopefully, you’ll find a winner and can focus on building the rest of your team, and profiting from your ventures.

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