Mortgage After Bankruptcy: These Steps Could Help

by R. Lawrence Anderson

If you want to increase your chances of qualifying for a mortgage after bankruptcy, here are some steps you can take:

First, if you plan to apply for a mortgage after bankruptcy, you will want to have any inaccurate or obsolete negative information on your credit reports corrected or removed. This can help increase your credit score.

Also, you will want to establish some new accounts, and pay them in a timely manner over time. If you've paid the accounts on time for about 18-24 months since your bankruptcy, this should help rebuild your credit - which can be a plus when applying for a mortgage after bankruptcy.

Next, you will want to work with an experienced mortgage broker. Why? Because buying a home is probably going to be one of the biggest investments you'll make. You will want to have an experienced professional guiding you through the lending process - especially when it comes to applying for a mortgage after bankruptcy.

A mortgage broker typically has access to dozens of lenders and will probably have a good idea of which ones will (and will not) approve you for a mortgage after bankruptcy. In addition, they will be able to tell you what to expect in terms of the financing process.

So how do you find a mortgage broker? One way is to to ask friends or real estate agents for a referral. Once you have a few names, set up an appointment to interview each mortgage broker.
Among other questions, you will want to know if they have successfully been able to get other individuals a mortgage after bankruptcy. You also want to make sure they are licensed.

Another question you will want to ask is what type mortgage loan (A, B, C, or D) the mortgage broker thinks you can qualify for. Why? The lower the grade of the loan, the higher the interest rate. This is an important consideration when applying for a mortgage after bankruptcy.

In addition, there are other important questions you will want to ask a potential mortgage brokers - ones that could help you save money and/or increase your chances of qualifying for a mortgage after bankruptcy. While there isn't enough room to cover them here, I go into detail on them in After Bankruptcy Credit Solutions.

Also make a point to bring your financial information with you when you meet with a mortgage broker. For example, you should have your income and expenses available as this will help the broker determine the loan amount you may be able to qualify for when it comes to a mortgage after bankruptcy.

Generally speaking, most lenders will allow you to get a home loan with a payment of up to 28% of your gross income. So if you make $4,000 per month, that would be $1,120. But keep in mind that this just an example. Again, a good mortgage broker can explain the criteria that each lender has.

If you have copies of your credit reports from each of the major credit reporting agencies (Experian, Equifax, and Trans Union) this will help also. Your credit report will play a major role when it comes to qualifying for mortgage after bankruptcy.

On that note, if you want to increase your chances of qualifying for a mortgage after bankruptcy, make sure that any inaccurate or obsolete negative information is removed from your credit report. This is important for two reasons: (1) It can mean the difference between qualifying or not qualifying for a mortgage after bankruptcy, and (2) if you end up qualifying for mortgage after bankruptcy, any inaccurate or obsolete negative information on your credit report could cost you up to $1,000s or even $10,000s in additional interest.

How do remove any inaccurate or negative information from your credit report, so you can improve your chances of qualifying for a mortgage after bankruptcy? There are specific steps you need to take. While I cover them in After Bankruptcy Credit Solutions, there is not enough room to go into detail here. Just remember that ideally you want rebuild your credit history before applying for a mortgage after bankruptcy.

By the way if you think that removing inaccurate or negative information from your credit reports takes a long time, I have good news. There is a way to have it removed in as little as 72 hours - the service is typically not available directly to consumers. In After Bankruptcy Credit Solutions I show you how to find this type service if you are trying to qualify for a mortgage after bankruptcy.

In this article we touched on two important steps you can take if you plan on applying for a mortgage after bankruptcy: Correcting or removing any inaccurate or obsolete negative information from your credit reports, and finding a mortgage broker to guide you through the lending process.

Copyright © 2006 Innovative Solutions Publishing, Inc. All rights reserved.

The company and product/service names referenced in this article are the trademarks, registered trademarks or service marks of their respective owners. None of the owners have sponsored or endorsed this article.

DISCLAIMER:

This information is designed to provide only a general overview of the subject matter herein.

This information is provided with the understanding that neither the publisher nor author is engaged in rendering legal, accounting or other professional advice. If legal or other expert assistance is required, the services of a professional should be sought.

Neither the publisher nor author shall be liable for any loss or damages, including but not limited to special, consequential, incidental or other damages, caused by the information contained herein.

R. Lawrence Anderson is the author of After Bankruptcy Credit Solutions which shows individuals how to qualify for credit & loans after bankruptcy. For more information visit: http://www.bankruptcy-credit-solutions.com.

For more News, Articles, Guides, Tips, Tricks and various Mortgage And Loan Products information... visit our site at http://www.mortgage-and-loan-info.com.

Quick Mortgage Tips For Home Loans, Equity Loans, Reverse Loans, Cash-Out Loans And Refinance Loans

by Chris Robertson

If you're considering a mortgage loan, you might be wondering what options are available. Today, there are many options besides the conventional methods of obtaining a mortgage. Whether you're applying for a home loan for a new home, a refinance loan, an equity loan, a HELOC, or a reverse loan, you should be aware of what each loan entails.

Buying a New Home

When buying a new home, you'll need to be approved for a new home loan through a lender, or ask the seller to finance the home for you. Before applying at a lending institution, research your options. Determine how much 'house' you can afford. Use online mortgage payment calculators to figure what the payments would be for different home loan amounts. Then, you'll know what price range you can shop within, and whether or not you can afford the payments. Remember, your income/debt ratio must fit within the lender's guidelines to qualify for a conventional loan.

Healthy and 'Not-so-healthy' Credit Scores

If you have an excellent credit score, then your income/debt ratio along with the investment capital you have available will be the main factors in determining home loan availability. However, if there are flaws in your credit history due to non-payment or repossession, you will be limited in the type of home loan you can obtain. But don't lose heart. Many homebuyers whose credit is 'not-so-great' do qualify for non-prime loans. Non-prime loans can be a bit higher-priced than prime loans or have higher interest, but you might still be able to buy your dream home!

Creative Financing

Don't settle for conventional loans if you don't have to. There are many creative ways to finance a new home loan. If you do not have the needed investment capital or a down payment, some lenders will finance the down payment for you as well as the closing costs. If not, the seller might be willing to finance part of the loan to cover these costs. This can work even if the seller doesn't have extra 'money to lend!'

Explain to the seller that it could be advantageous to him because of income taxes. He might much rather claim an income of $100,000 than $120,000! Spreading out payments for $20,000 of the loan amount over a period of five or ten years could make a huge difference on his taxes due for that year. Consult with an accountant to find out if this could work in your situation.

Unusual Types of Home Loans

If you're worried about budgeting with a new home loan payment each month, try a FlexPay loan where several monthly payment options are available to you every month. These options include interest only payments, full-amortized payments, and minimum payments. There are also bi-weekly mortgages for paying more toward your premium each year through a bi-weekly payment schedule.

Hard Money loans are also available when there is a large amount of equity built up in a home. The loan approval is based more on the home or property's value than the borrower's credit history or job/salary history.

Refinance Loans

If you plan to refinance your home, there are several options. A refinance means you are re-evaluating the terms, payments and interest of your loan. You might refinance to simply get the interest rate or payment lowered. Or, you might want to keep a little cash out for yourself as well. This is called 'Cash-out' refinancing. Cash-out loans are made when you want to refinance your home for more than is owed on it. For instance, you owe $60,000, but want to refinance for $80,000. You'll pocket the additional $20,000 to use for home repairs, remodeling or whatever else!

Reverse loans are available for those over 62 years of age who own their home free and clear or have much equity built into it. They can receive a monthly payment, a lump sum or a line of credit. This does not have to be repaid until the borrower moves or passes away. Then, the estate can be sold to pay the note.

Another option for leveraging your home equity is to create a HELOC (home equity line of credit) that is secured by the equity in your home. HELOCs can be used to pay debts, make purchases, or anything else. Be aware, however, that the interest rate can fluctuate monthly.

Now that you are armed with many options for obtaining a home loan or refinancing your mortgage, check with an online lender to find out what plan will work best for you. Use the available tools and calculators to do some budgeting on your own as well. You'll be moving in that new dream home in no time!

Chris Robertson is a published author of Majon International. Majon International is one of the worlds MOST popular internet marketing and internet advertising companies on the web. Visit their main business resource web site at: http://www.majon.com

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What Is A Commercial Mortgage?

by Benedict Rohan

A commercial mortgage is similar in principle to a residential mortgage except it is used to purchase a property or to raise capital for commercial purposes rather than domestic purposes. As with residential mortgages, the lender retains rights to the property until the loan is repaid in full.

What would you use a commercial mortgage for?

The types of property that people might purchase using a commercial mortgage could be anything from hotels, restaurants, shops and takeaways to office buildings, factories, warehouses and farms.

Sometimes people might buy the business and property at the same time if the two are intrinsically linked, such as a hotel or restaurant.

When properties are purchased to be used as business premises, the mortgage is known as a commercial owner-occupier mortgage.

Alternatively, a commercial mortgage could be used for refinancing.

People might want to unlock capital from their existing business property to expand or improve their premises or facilities, or to raise cash for any other business purpose.

There are many other uses for a commercial mortgage, such as buy-to-let mortgages, where people purchase a property (perhaps residential) as an investment and let it out, or commercial development mortgages, where people purchase a property to develop it and sell it on for a profit.

Why purchase premises rather than rent?

Taking on a commercial mortgage is a major leap for your business and must be carefully considered before entering into the commitment.

However, it can be an excellent investment and owning the business premises that you occupy can bring many advantages to your business:

In most circumstances the proceeds of the loan are not considered to be taxable income and the interest payments are tax deductible.

You’ll have a clear repayment plan, with terms and rates tailored to suit your needs. (See below for more details on this.) This means that you can manage your cash flow more easily.

Mortgage repayments can be cheaper than rent.

Any property purchase is an investment. Your asset could appreciate a great deal in value, thereby increasing your capital.

You have the potential to make money by subletting. For example, you might have space in your property that you don’t currently need, and could make money on it by letting it out to another business until you need it to expand your own business.

Why use a commercial mortgage to raise capital?

If you already own business property and need cash for your business for any reason, unlocking the capital in your property by refinancing or remortgaging is an effective solution. Think of it as a loan that could be used for any business purpose – not just expanding or improving your premises. There are many benefits in doing this:

Commercial mortgages can be easier to obtain than business loans, especially for small businesses, as the property provides security to the lender.

Unlike many business loans, which tend to have a short repayment term, commercial mortgages cover a long period – anything from 15 to 25 years, depending on the lender and the financial circumstances of your business.

In most circumstances the proceeds of the loan are not considered to be taxable income and the interest payments are tax deductible.

There are two ways in which you might use a commercial mortgage to raise capital for your business:

1. Refinance your current commercial mortgage to include the loan amount that you wish to borrow.

2. Release the equity that has accumulated in your current property, i.e. the current value of the property minus any outstanding mortgages or debts tied to it.

What are the costs and repayment options for commercial mortgages?

Repayment plans tend to be similar to residential mortgages. The main options are either fixed rate or variable rate repayment mortgages or interest only/endowment mortgages.

Unlike residential mortgages, however, the interest rates for commercial mortgages tend to be higher as business lending is perceived as more of a risk. The rates will vary depending on the circumstances of your business, but generally speaking, the higher the risk, the higher the interest rate. For the same reason repayment terms also tend to be shorter than residential mortgages – typically 15-20 years.

It’s likely that you’ll also need to raise a deposit, as most lenders won’t provide 100% loan-to-value mortgages – i.e. they won’t provide a mortgage for the full purchase amount and will expect a down payment from you as a form of security (typically 20-30% of the purchase price, although some lenders accept as little as 5%, but with a higher interest rate for repayment).

Other expenses to consider are the setup costs involved in arranging a commercial mortgage, such as legal charges, surveys and broker fees.

In terms of responsibility for repaying the mortgage, this depends on the type of business. If you’re a sole trader the responsibility will lie with you and you may also be personally liable should you default on the repayments – meaning that you could lose personal assets as well as the commercial property that is mortgaged. If you’re in a partnership, the responsibility and liability apply to all partners. If it’s a limited company, the responsibility and liability belong to the business, although personal security may be required to approve the mortgage depending on the profitability of the business.

How do you obtain a commercial mortgage?

When applying for a commercial mortgage, you’ll need to do your homework and build a strong business case to demonstrate your company’s ability to repay the mortgage. Be prepared to undergo a thorough examination of your finances, including:

business history of your company: financial statements, profit and loss accounts, balance sheets, past and current cash flow, all certified by an accountant future projections for your company: long-term business plan, intended use of the property, earnings potential, projected cash flow personal finances: the financial histories of yourself and all other key stakeholders in the business, such as credit worthiness and past earnings All of these factors will determine the lender’s perceived degree of risk in lending you the money, which will in turn determine the term and interest rate of the loan that they are willing to give you.

The obvious first step to many people applying for a commercial mortgage is to approach their bank or business lender, with whom they already have an established relationship. However, for this very reason it’s unlikely that you’ll receive a competitive deal.

The best way to get a commercial mortgage is to use the services of a specialist independent mortgage broker, who can help you get a good package to suit your needs whatever your circumstances. Even if your credit isn’t great, it doesn’t mean that you won’t qualify for a commercial mortgage. Having a broker to represent you will really strengthen your case. They have access to a wide range of lenders and understand their criteria for lending, as well as your specific needs.

They can therefore undertake a targeted search, increasing your chances of finding a suitable loan. In fact, the broker may even be able to obtain several different options from various interested lenders, which provides the scope to negotiate a fantastic deal for you.

Money isn’t all that you’ll save. Imagine if you tried to apply to several lenders yourself – think of the time taken to complete all the applications, and the time wasted in applying to unsuitable lenders.

The independent advice and specialist knowledge that a broker provides are invaluable.

Benedict Rohan works as a freelance finance writer. Commercial Mortgage, Homeowner Loans, Remortgages

Website: http://www.mortgagenation.co.uk

For more News, Articles, Guides, Tips, Tricks and various Mortgage And Loan Products information... visit our site at http://www.mortgage-and-loan-info.com.