Loans Equity CA

A home improvement loan is actually one of the simplest ways in which you can live in your dream home. This is because it is the prime option for someone wanting to enhance the appearance of their home and also add to the value. In other words, a home improvement loan pays off in many ways. First of all, your home looks great and, second of all, the investment pays for itself because the home goes up in value.

As for how you get a home improvement loan, there are a couple of ways. The first is that you can simply go to your bank and request the money. You can do an assessment of how much work you would like to do and request that amount. The second way is to refinance your mortgage and use the equity in your home to fund your home improvement project. How you do this is you refinance for the worth of your home, you pay off our mortgage, and you then take the difference between the worth of your home and your mortgage and use that money to fund your home improvement project.

Types of home improvement

You can use your loan to fund any improvement to your home. You may want to simply improve the appearance of your home or you may have worn and broken areas that must be fixed or replace. However, the loan must make sure that the improvements that are done to the home are right with the borrower’s needs and don’t exceed the amount that the borrower is borrowing. This means you need to make sure you cover all of your improvements by not deviating from your initial plan.

For example, you may wish to add rooms onto your home. Maybe you need an extra bathroom or an extra bedroom. Perhaps you want a sun porch or a sitting room where you can sit and relax for a while. It is really up to you. Maybe your plumbing needs an overhaul or you need to put more siding on your house.

Here is a more detailed idea of what you can achieve with a home improvement loan:

- Installation of central heat and air

- Installing a fire place

- Swimming pool installation

- Rewiring the home

- Remodeling any room in the house

Loan details

There are certain details of the loan that you must be mindful of. The first thing you must keep in mind is that the interest rate of your home improvement loan is going to depend on your credit rating. If you are credit challenged, you may find that getting a competitive rate is somewhat difficult.

However, there has been an increased amount of competition between financial institutions because more and more people are looking for home improvement loans. Because of this competition, there are more options for borrowers to take advantage of. There are a number of online lending services that have added to this competition, which also increases the chances of getting an approval on a home improvement loan. The process has been simplified by these entities.

But before getting the loan, make sure you get quotes on how much it would cost you. You can assess the work yourself, but you can have a professional do it even if you do decide that it is a project you want to do all on your own. This increases your chances of being able to stay within the amount the loan is for. If you exceed your loan amount, you may not be able to pay for the remainder of your improvements. But know that if you need a home improvement loan, different lenders have different options for you.

How you can save money on home improvements and get estimates from local contractors in the Toronto’s area. They offer Home Improvement Help, Contractor Referral, Drafting Service.

Home Improvement Loan FAQ:

Question: How to get a home improvement loan?
My parents and I own 2 homes on the same lot. We haven’t had home owners insurance for over 10 years. I want to get a home improvement loan, so I can qualify for home owners insurance and improve my living situation. What can I do? I need the electric, plumbing, and the outside of my house done. No, I don’t qualify for hud.

Answer: Contact an insurance company directly, try to avoid an agent. Anyone can get property insurance. You just have to own property.

Banks will require you to have property insurance. They want the loan to be paid off if the house burns down. While a lender would usually require insurance, having insurance doesn’t imply that you can get a home improvement loan.

Question: Should I get home improvement loan or refinance with cash out?
I want to refinance my home to take advantage of lower interests rates. I also want to renovate my house since it has severe structural problems.

Should I refinance and get cash out to use for home improvement or should I refinance without cash out and get a separate home improvement loan?

What is the difference between the two scenarios?

Answer: A refinance with cash out would save you money in the long run. The interest rate would be lower for a 1st mortgage.

If you refinanced for a lower interest rate, you would be required to pay for the refinance and other closing cost.

Now if you turned around immediately and got a second mortgage or a Home Equity Line of Credit (HELOC) you would once again be required to pay for the loan as well as any related closing cost. On this 2nd mortgage the interest rate would be 2%-3% higher.

For any legal or tax matters you should consult with your attorney or tax consultant.

Question: Is there really a no interest government loan for home improvements?
I heard there is a no interest government loan for home improvements and you don’t have to pay it off until you sell your house. Is this true? If so, how do I apply for the loan?

Answer: Not that I’ve heard of. The only thing you can do, is certain improvements can be taken off your taxes next year at half the price you paid for them. They have to be energy efficient projects like new windows, doors, sealing up cracks, new heating system. Putting a new deck on doesn’t cut it.

Question: Can you use part of a home loan for immediate repairs?
I’m in the preliminary phases of purchasing a home. I’m researching and learning as I go. My question is, if I qualified for a $150k, would I be able to find a home that say, is $100k and use $50k for repairs/improvements? I’m finding a lot of homes that need renovations and are listed for a low price. I was just wondering if I could take out a larger loan (one that I’m still qualified for) to do improvements.

Answer: Only if the house appraises for more than the selling house. For example, if the $100K house in your example appraises for say $110,000, I would assume you would put down $10,000 and the bank will lend you the $100,000 (bringing your LTV to90%). Now, if the house appraises for say $150,000 and sells for $100,000, assuming the same 90% LTV, you would be able to borrow about $135,000, pay the house off and have $35,000 left for repairs (LTV being “Loan to Value” which is amount of mortgage compared to appraised value of the home). At best, you can only borrow up to 96.5% of the appraised value of the home (using an FHA mortgage), so you can never borrow more than it is worth.

Question: Is interest paid on Personal Loan used for Home Improvements tax deductible in US?

Answer: No. To be deductible the loan must be secured by the property. By definition a personal loan has no security other than the borrower’s word so the interest is not deductible.

Question: What is a “bid and draw schedule”?
I need to have the foundation repaired on my house and decided to take out a loan. Since I was doing that, I decided I’d repair a few more things. The problem is the only loan I could get is a home improvement loan where the bank directly pays only one contractor. The foundation company has agree to play “contractor” (no license is required in my state) and referred me to some people willing to work as subs. The loan papers ask for a “bid and draw schedule” and I don’t know what it is or what it should look like and neither does the foundation company.

Answer: The bid and draw schedule are two different things. The bid is just that, the contractors proposal in writing for the entire scope of the project. It should also state expected time of completion and warranty statement. This is your bible document in contracting someone to do a job for you.

A draw schedule is a statement in writing that your primary contractor provides to you and the bank stating the duration of the project and a list of the draws that he will expect the bank to pay, usually stated in percentages and by month. I have seen some banks that expect a very detailed draw schedule that includes any subcontractors and the amount and time frame in the project that they will expect to be paid. Your bank should have clued you in as to what exactly they wanted so I would ask your contractor for a basic schedule of payment that he expects and see if that will fly. The bank will tell you if they want more detail.

Question: Where would you find a list of government grants on the internet?
I’m looking for a site, preferably made by a reputable organization, that will tell you what government grant (not a loan, a grant) you would qualify for, given the information entered. Fastweb.com does it for scholarships, but is there any out there that would do it for grants like to start a new business or for home improvement?

Answer: No Government grants for personal use. All grants are reserved for municipalities or nonprofits. You can check with your municipality and see if they were given any for neighborhood revitalization. This could be for home improvements and or business start up.

Question: First time homebuyer and FHA 203k loan?
As a first time homebuyer should I pursue this property that requires FHA 203k financing? It is a foreclosure – I haven’t seen the house yet (going to see it this afternoon) but it is being sold ‘as is’ so I know it needs some work. We are on a strict budget – we absolutely can’t afford payments on a mortgage any higher than $140k. The listing price is $119,900 so as long as the improvements do not go over $20k we are ok. The assessed value of the home is $142k. Is this a lot to be getting into for a first time home buyer?

Answer: 20k isn’t going to go very far, the repairs would have to be extremely minor. Have a contractor give you an estimate before you commit. I have a feeling you have no idea what materials, labor and permits costs.

Whether you are renovating a bedroom or adding a patio deck, you are going to have to plan for the costs associated with the renovation. When planning a home renovation project, it is important to choose the right home financing plan that meets your needs.

Choosing the right home financing plan depends on the length of the project and how much you can afford to pay for the project, When you take on longer repayment terms, you will have to pay more because of the interest rates, however your monthly repayment fee will be lower. By determining the length and costs of the project first, you will have an easier time choosing one of the following home improvement finance plans:

1. Unsecured Loan: Often referred to as a personal loan, an unsecured loan is a loan that is not secured against your property, but against your credit rating. This type of loan is usually taken out for smaller projects. You can obtain a personal loan from a bank or lender. .The interest rates usually vary according to market conditions.

2. Secured loan: A secured loan is a loan that uses the assets of the borrower to ensure repayment of the loan. When you borrow money against your house or vehicle, the lender is guaranteed to retrieve its money if you fail to make the repayments.

3. Home Improvement Mortgage Refinance: Refinancing your mortgage at a fixed rate allows you to use extra money for your renovation project. The repayment schedule is usually for 20 or 30 years, or the term of your mortgage

4. Home Equity Loans: A home equity loan involves borrowing against the equity in your home. You can receive a lump sum to pay for your renovation project. Obtaining a fixed rate will make repaying the loan much easier. If you fail to make your payments, you are at risk of losing your home.

5. Home Equity Line of Credit: This type of loan works by giving you an open line of credit. This type of loan does not usually have a fixed rate so interest rates depend on market conditions. This type of loan is good for “pay as you go” renovation projects.

6. Bank Loans: Bank loans are usually taken out for small renovation projects as they have to be repaid within a few years. Make sure you check to see if you have a fixed rate loan so you will not be dependant on fluctuations in the market.

The following is a list of tips to help you obtain the best home improvement financing plan:

Know Your Final Costs: Before seeking home improvement financing, add up all the costs associated with the renovation project. Make sure you allow for unexpected costs.

Affordability: Make sure you can afford the repayments. Make a list of monthly expenses including your mortgage to make sure you have enough money to repay the loan. Determine the amount you can actually pay each month.

Compare Financing Plans. Don’t settle on the first renovation financing plan. Check with three or four different lenders to see if you can get a better deal. It pays to shop around.

Find a Reputable Lender: Make sure you obtain a loan from a lender that is known for its fair rates and honesty. Read the fine print for any home improvement financing plan. Make sure you know if you have a fixed or variable interest rate.

Because home improvement projects vary from person to person, there are many types of home improvement plans available. To acquire the best home improvement loan, it is important to do your research. No one wants to mistakenly add debt from a project that was supposed to add value to a home.

How you can save money on home improvement help in Toronto and get estimates from local contractors in the GTA area. They offer Home Improvement Help, Contractor Referral, Drafting Service.

Home Improvement Financing FAQ:

Question: Whats my best option to get finance for home improvement?
I’m thinking of renovating my cellar in my house and am wondering what would be my best option to gain funds to do the work. My mortgage company do advances on your mortgage that you pay off over the remaining time left which in my case would be twenty years. Would it be a good idea to do this or would I be better getting a separate home improvement loan from another company. The work has been quoted at roughly 5/6 thousand pounds. Has anyone got any advice?

Answer: Do you need the space? If not, hold off. You don’t want to take on additional debt at this point if you can avoid it. If you have to renovate because you really need the space, or to fix problems with the basement, then your best bet is to put your savings in a CD and get a secured loan (lowest interest rate, easiest loan to obtain now). Or get a second loan for a much shorter term than re-jiggering the mortgage for a 20-year term. That, too, will cost you less in the long run. For such a small amount, you probably shouldn’t go more than 3 – 5 years.

Question: Home Improvement Financing Bank?
I have a small business in Miami, FL, it is a hurricane (impact) windows and doors dealer, and I also do the installation and repairs. I’m searching for a bank that financing my customers. Can someone help me?

Answer: Many big banks offer that. You will have to introduce yourself in person. You will be assigned a contact person who will take the calls from your customers. She will tell you what information your customers must have ready when they call.

Question: Where to find Help to finance home improvement?
Is there help for citizens to fiance home improvement?

Answer: It’s called a second mortgage or home equity loan. Sometimes there are community grants available for low-income families. You should check with your city’s planning commission.

Question: What is the best way to finance home improvements?
I’m just wondering if we should do a home improvement loan, refinance our mortgage, do a home equity loan, etc.

Answer: If the home improvement is one that will up the value of the home considerably (redo kitchen, finish basement) use a home equity loan, just make sure you don’t over exert yourself financially.
For minor home improvements (paint, moulding) save up to do the repairs or do them in small steps.
The best way to finance home improvement is to not finance them but to pay for them up front. This isn’t always an option so go over yours carefully and if you use your house as collateral be sure to justify the extra costs (construction costs and insurance costs).

Question: Financing for a mobile home made in 1976?
I own a mobile home that was built in 1976. I own it out right, no mortgage. I am trying to find a company that does financing or refinance I guess on a model this old, to do some very much needed home improvements. Do you know of any or recommend any?

Answer: I don’t know of any that would do that. I would think a personal loan from a bank would be more beneficial and likely.

Question: Best way to get financed for home improvement of 50k to your house?

Answer: There are lots of variables here that you do not address in your question. What is the home worth now, what will it be worth post improvement? What is your credit situation? What is your first mortgage on the house and how old is that mortgage? What is the rate on your first mortgage. You may want to re-finance the first mortgage with 50K cash out to do the improvements. You will get a longer term and a fixed rate. Most seconds are adjustable rate and shorter term. You need to sit down and speak to a knowledgeable expert about all of your options. You are borrowing a good sum and the variables can add up to thousands.

Question: Can I cancel a contract to have a home improvement company install cabinet door?
I have signed a contract to have a home improvement company install cabinet doors, they gave me 3 days to break the contract which I did not do. Now my finances have been destroyed, and I cannot proceed with the project. I cancelled the project before they gave me an installation date. They say that I HAVE TO proceed. Do I have to? I can’t. I have paid no money so far.

Answer: You can cancel, and that would give them the right to sue you for breach of contract. You would then be responsible for the damages they incurred up to that point (i.e. costs of specialty materials that can’t be used for other projects, etc.), or loss of profit if the contractor hasn’t made any expenditures yet.

Try to settle this before it goes any further. You may be able to talk with the company and pay any material and labor fees they have already incurred or perhaps ask if you can arrange payments for the installation. Otherwise, you are bound by the contract.

Question: If you have a lien on your house can you get a home improvement loan on the property?
The property is financed through a private party, not a bank or mortgage co. Can you get a home equity loan to fix it up? Or a home improvement loan even though there is a lien on the property?

Answer: Yes. The mortgage company will want to get the home appraised to make sure it is worth how much you are trying to take from it. But as long as you have enough it should not be a problem. You can either keep your current mortgage and also get a second mortgage for however much you are looking to get. You also have the option of refinancing and paying off the original lien and receiving the rest of the money from the loan payed out to you so that you can use it for home improvements.

When people buy a house, they usually get mortgage, as it is more convenient to pay back rather than shelling out thousands and thousands of cash. Besides, mortgage helps you to use your money cleverly. Like the concept of investment, debt helps you use your instant cash for other financial opportunities because with debt, you get to make a purchase or avail of services without having to shell out the whole amount now. That’s why mortgage is a popular concept in home buying. Besides, in the absence mortgage, it would be impossible for people to afford buying a home.

However, mortgage may help you afford home buying but the overall cost of getting it may be sorely expensive. If you are not aware of the different kinds of mortgage and their rates, you may end getting a plan that is going to give you problems in the future.

Yes, it is indeed true. There are different kinds of mortgage in the industry and they have different terms and conditions. The rates are also lower for some, especially those that are government-backed.

One of the loans that you could enjoy is the FHA loans. FHA stands for Federal Housing Authority. It is a kind of loan created by the government in order to provide low financing cost to the American borrowers.

This kind of financing is highly appraised for not being strict in qualifying for credit. For you to see the difference of FHA loans from traditional loans here is a comparison:

1. Down payment. As to upfront down payment, the minimum for FHA loan is at 3.5%. As for the conventional loan, the minimum falls at 20% (after which you will be required to obtain private mortgage insurance). It can also be in a form gift fund.

2. With regard to closing cost, it is lower compared to conventional loans. FHA closing cost is highly regulated by the HUD; compared to conventional that could be go higher depending on the rates and services of the loan obtained.

3. The mortgage insurance is lower compared to traditional loans.

4. The reserve requirement is eliminated. There is no need to pay in advance the principal, interest, taxes and insurance upon closing.

5. If you decide to pay off your loans in advance, you won’t have to pay for penalties.

6. Underwriting is not so strict. It can be given to anyone just as long as they can afford the loan and just along as the house brought will be used as primary residence. They are more concerned with the borrower’s ability to repay rather than spending time investigating on credit worthiness.

7. FHA limits is identified using your monthly income, which are lower than the conventional loan. If amount you borrow exceeds the limit set, you will then have to shell out additional funds. On the other hand, you can take out another loan for the excess.

So take not of these things and weigh the advantages and disadvantages. Know that traditional loan isn’t just the only loan you can get. You can avail of the FHA loan as well just as long as you can afford it.

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FHA Loan FAQ:

Question: Is there any state where I can apply for an FHA loan when contracting?
We currently reside in AZ and our loan officer is telling us that we can’t apply for an FHA loan if we are contractors. I know you can apply for a loan in a different state from the one you reside at, are there any states where I can apply for an FHA loan when on 1099?

Answer: It’s more a matter of qualifying because you are independent contractors. It may be FHA guidelines and has nothing to do with the state you are working in. You may have to go another financing route, have you thought about Contract for Deed?

Question: Considering an FHA Loan through Chase Bank in San Diego. Any complaints about Chase?
My wife and I have been in contact with Chase Bank in San Diego regarding an FHA Loan as first time home buyers. We are a little hesitant going through Chase as we don’t know much about this bank. Would it be better to try and get a mortgage through a local San Diego Credit Union? My credit is excellent, no problems on the credit report.

Answer: I’d go with a smaller lender if you can. But not all lenders offer FHA loans. That’s the first question you’ll need to ask.

Question: FHA loan in 1998 – Seller purchased from builder with builder buy down. How much do they owe today?
A seller comes to you who purchased a home in August of 1998 with an FHA loan. The seller purchased the home from a builder with a builder buy down. The original loan amount was 77500. It was a 2 year 1 point per year buy down Starting at 6% on a 30 year loan. How much do they owe today?

Answer: If the interest rate were 5% in 1998 and 1999 and then jumping to 6% thereafter with the payments adjusting the answer would be $64,147. However if the interest rate were 6% in 1998 and 1999 and increasing to 7% thereafter the answer would be $65,859. However you should check with the lender to be sure.

Question: How soon can I refinance a new FHA loan?
I’m in the process of buying my first home, and the bank won’t finance it using a conventional loan. How soon can I refinance to get rid of the mortgage insurance and switch over to a conventional loan? I think I’ve heard an owner has to carry MI for 5 years? Is this true? Do I have to wait 5 years to refinance?

Answer: They do have restrictions. Your deed will tell you or you can ask your agent. If you are unable to qualify for anything but FHA, you won’t qualify to refinance anytime soon. They use the same rules.

To get rid of mortgage insurance, you need at least 20% equity. Why not just pay that up front? If you refi with less than 20% equity, you still have PMI.

Question: What is the best way to get a low interest fha loan in ohio?
Would it be better to deal with mortgage broker or individual banks or would a realtor be a help?

Answer: The realtor is no help as they will send you to their lender of choice. The mortgage banker or broker can find the best rates.

Question: Is a gas-burning fireplace a reason NOT to get an FHA loan?
How about a regular fireplace?

Answer: No and No. But you will have to pay a chimney sweep to certify the fireplace is installed correctly and operating at 100%.

Question: Do I qualify for an FHA loan or FHA grant?
I’m married and wife has had her parents house under her name for the last 3.5 years. If I apply for an FHA loan just under my name, do I qualify? Or does the fact that my wife has the house under her name deny me. I have never been a home owner, never bankrupt, no foreclosures, and my credit score is around 640.

Answer: You can, BUT, since you are married, your wifes debts will count against you in regards to your income/debt ratio. If she makes good money on her job, both of you can apply for this loan and see if your ratios come out right, considering the other home is not FHA?

Question: If my husband is unemployed, but I have a steady job, can I still qualify for a FHA loan?

Answer: Sure, as long as your income and credit are OK. There is no rule that all adults in a household have to work.

The Federal Housing Administration (FHA) is an agency that aims to assist hopeful future homeowners to successfully gain ownership of a property. For one, FHA loans are widespread among those who have difficulty in financing. However, any borrower must see both sides of this loan so a profitable venture could be expected in the end.

Basically, an FHA loan enables a buyer to give a small down payment upon purchasing a home. Say, he only has to pay 3 percent of the purchase price as the initial payment. Acquiring this type of loan may be helpful for current homeowners to finance remodeling a home, obtaining home repairs or home energy-efficient improvements. This could also be used to refinance current loans. This loan is also advantageous for sub-prime borrowers as there is no prepayment penalty involved.

All FHA insured mortgages are assumable, typically beneficial for sellers. For example, a financially capable buyer may claim responsibility of the seller’s mortgage. The buyer would take over the loan so the seller would be saved from scouting refinancing loans. Then again, there are certain restrictions on the assumability conditions of FHA loans. Only those mortgages that originated before December 1, 1986 are free from assumability limitations. The lender usually requires thorough report of the creditworthiness of the person (assumptor) assuming the loan. Private investors are not allowed to become assumptors of insured mortgages that were subjected to restrictions of the 1989 Act. To further learn about terms and conditions, the Housing and Urban Development online site has specific information about this matter.

Now here is the other side of the deal, there are some cases wherein this loan would not work for the home buyer’s benefit. Some sellers could not take the risk of receiving such loan. This is because the agency is not actually lending money to the buyer. Instead, the agency merely guarantees the lender to cover for the buyer in case delinquent payments occur. And processing the payment claims may take some time. Thus, there are fewer deals now that accept offers from buyers backed up with FHA loans.

Another disadvantage for the buyer is that there is a need to pay more for the private mortgage insurance (PMI) given that the down payment is much lower than conventional market rates. The situation here is that the buyer has to pay the one-time PMI fee and continue paying for monthly dues. The money saved from low down payment is then off set by the costly obligation every month.

The loan application process also poses some difficulties. There are a number of requirements the applicant has to accomplish for a limited period of time. There are also limitations on the type of housing units the loan might be used for and amount of money that could be borrowed. On the other hand, the limitations vary according to location.

So for the buyer, you firstly need to check out the application requirements and restrictions in your area. Weigh the pros and cons of getting this type of loan. The main advantage is that you could be given financial leniency. For the seller, you must screen your buyer if despite the attached FHA loan, you could still gain from the selling transaction. Or if you have this loan yourself, you need to evaluate whether the buyer is capable of assuming your mortgages.

There is no harm in trying out this type of loan. Both the buyers and sellers must take into consideration both the benefits and repercussions of acquiring such loan. In the end, both parties could look forward to satisfying deal.

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FHA Loans FAQ:

Question: Recent experience with FHA loans as a seller?
My realtor said that there is a good chance buyers for my house will get an FHA loan. I have heard that these loans can take considerably longer than conventional loans and the inspections are nit-picky and hard to pass. However, she also said that things aren’t as bad as they were in the past. Any recent experiences would be appreciated.

Answer: FHA is not nearly as bad as they used to be… 30 day closings are the norm now. Conventional loans require more money down & higher credit scores so there is more hope for your buyers if they go FHA.

Question: How to get FHA loan if property tax already payed for the next year?
I have already payed all of my property tax for 2010, but I understand that FHA loans will charge property tax with each payment. If I get an FHA loan do I risk having to pay property tax twice for 2010?

Answer: Your information is wrong. Prepaying your property taxes does not prevent you from getting an FHA loan nor do you have to “pay twice.”

Question: What are the minimum requirements for a fha home loan?
I have found a home I would like to buy but my credit rating is bad. The home is for 60,000 and I have about 4000.00 to put down. what’s the minimum credit rating for a fha loan and the other requirements? Also, where do I find a fha home loan at?

Answer: The minimum credit is a 620. You will need to put down at least 3.5% plus the house itself must be approved by the FHA. You “find” an FHA loan at banks….same place as all other loans.

Question: Does FHA loans finance purchase of Real Estate Owned (Bank-Owned) properties?

Answer: Well FHA doesn’t actually finance any property but yes they do. The main issue most people have is the selling bank refusing to accept offers from people who wish to purchase with FHA financing. FHA has requirements with regards to the condition of the property and the selling banks generally wont spend the money to get the property up to snuff for FHA financing.

Question: FHA loans for students?
I am a college student and I am somewhat confused on how I can get an FHA loan with my dad (co-borrower non-occupant). I don’t have an income but I can get a part time job. How should I go about getting the loan? I have no credit history, would that be a problem?

Answer: Your dad can be a non occupant co borrower for an FHA loan for you, even if you don’t have a job. Your dad would have to qualify for the entire mortgage then, and his current debt load, including his own mortgage.

Most FHA lenders do require a credit score of 620, so having no credit at all could be a problem. Your first step would be calling a bank or mortgage lender that specializes in FHA loans and have them pre qualify you. They can pull your credit to see where you stand, and run the numbers with your dad’s income to see if you’ll qualify that way.

Question: Does HUD allow FHA loans to close if tax returns have been filed, but IRS has not yet finalized?

Answer: HUD is not the problem, the lender is the one requiring tax returns to be finalized. This is a standard requirement. Every lender I know requires it. It’s not a HUD guideline, but every mortgage lender is allowed to overlay their own stricter guidelines over top the FHA guidelines, to help manage their risk. Not being able to verify a borrower’s income through the most recent tax returns is definitely a risk that most lenders are just not willing to take right now.

Question: Should I buy my own stove in an FHA loan?
I am purchasing a house with an FHA loan. This is a bank owned property. The previous owner took all of the appliances out the home. As a requirement of an FHA loan, a stove and hood must be in the property before closing. My realtor says I should get a stove and put it in there. That sounds stupid to me, because I don’t own the house yet and haven’t closed yet. Am I responsible for buying the stove if the seller (bank) hasn’t put the stove in?

Answer: It’s a requirement for your loan. If the house does not have a stove your loan will not close.
You have 3 options.
1) The seller pays to have a stove and hood put in.
2) You buy them and put them in
3) You find a different house.

Question: Do FHA loans finance short sales?
I was wondering if FHA financed “SHORT SALE” homes for sale. Considering that they are priced so low I am assuming that the buyer would have the pay the full asking asking price in cash, prior to closing; however, I am not very knowledgeable of this subject,

Answer: You can finance a short sale any way you like. Yes, you can use FHA if the home condition will pass FHA guidelines. A foreclosure is almost always going to cost the lender a LOT more than a short sale. The problem with a short sale is that they normally take a very long time to get an answer back from the lender approving the amount of the offer.

USDA Loans are becoming one of the most popular loan types in today’s mortgage market because of the favorable terms that they offer to home buyers across the nation. USDA stands for United States Department of Agriculture but USDA loans are used for much more than just farm loans. A USDA mortgage loan might be right for you if you want to buy a home with no down payment or mortgage insurance. If you’re unsure about your credit rating, or have concerns about a down payment, USDA mortgage loans can accommodate your circumstances with super low closing costs and no MI.

There are two types of USDA home loans that are commonly available for home purchases today. The first and most common type of loan is the USDA Guaranteed Rural Housing Program. USDA Guaranteed Loans allow for higher income limits and 100% financing for home purchases. USDA Guaranteed Loan applicants may have an income of up to 115% of the median household income for the area and all USDA Guaranteed Loans carry 30 year terms and are set at a fixed rate.

The second USDA program that is commonly available is the USDA Direct Rural Housing Program. USDA Direct Loans are less common than USDA Guaranteed Loans and are only available for low and very low income households to obtain home ownership, as defined by the USDA. Very low income is defined as below 50 percent of the area median income; low income is between 50 and 80 percent of AMI; moderate income is 80 to 100 percent of AMI.

To be eligible for either USDA Home Loan program, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must meet a specified percentage of your gross monthly income (29% ratio). Your credit background will be fairly considered. At least a 620 FICO credit score is commonly required to obtain an USDA approval. You must also have enough income to pay your housing costs plus all additional monthly debt (41% ratio). These ratios can be exceeded somewhat with compensating factors. Applicants for loans may have an income of up to 115% of the median income for the area. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance.

The is no set maximum loan amount allowed for an USDA Home Loan. Instead, your debt-to-income ratios will dictate how much home your can afford (29/41 ratios). Additionally, your total household monthly income must be within USDA allowed maximum income limits for your area. The maximum USDA Rural Loan amount will be 102% of the appraised value of the home (100% plus the 2% USDA home loan guarantee fee).

If you are interested in purchasing a home with no money down and you are not a veteran of the military, there is no better mortgage option available in today’s market than a USDA Home Loan.

Please visit http://www.usdaloans-101.com for the most current information on USDA Home Loans and rural loans in today’s market.

USDA Home Loans FAQ:

Question: Does anyone know what interest rates are like for USDA home loans?
Credit score is above 750, debt to income ratio is pretty low, and we’re within the income bracket for it. We were looking at an FHA, but I saw that we might be eligible for this. I’m at work right now, and the only thing I have access to is the internet. I plan on calling someone in a little while, but I’m getting antsy and thought I would check to see if anyone had any ideas of what I could expect.

Answer: I just locked in an interest rate yesterday at 5 1/4%, but it has been fluctuating lately between 5 and 6%.

Question: Did the congress bill pass that gives more money for USDA home loans?

Answer: I found that they get money to give loans out at 100%. The government site is used to determine eligibility for certain USDA home loan programs. In order to be eligible for many USDA loans, household income must meet certain guidelines. Also, the home to be purchased must be located in an eligible rural area as defined by USDA.

Question: How do the new USDA home loans work?
I want to buy a house, but my credit score is poor, my husband’s is only 580, but my mon told me that my little sister and her husband just got a USDA loan with no money down and their scores are not good either. Is this an option for me or what should I do?

Answer: I believe USDA requires a credit score of at least 620.

Question: USDA home loans? Any recommendations of brokers/companies, what about Amerisave?
Right now my husband and I have been pre-qualified with Amerisave but I searched their name and there were some complaints about them. Also has anyone ever used Amerisave? I checked them on the better business bureau and they got an A and their rates are great but when I googled them they had some complaints about not closing in time so we’re checking out other companies/brokers.

Answer: Contact a LOCAL bank or mortgage broker, preferably one who is recommended by your real estate agent. Most mortgage brokers in rural areas are set up to do USDA loans. Home loans are too complicated to be done online, and in most cases, you will appreciate having a real person to deal with. A really excellent local loan officer will answer all your questions and even attend your closing with you.

Question: Where do you apply for a usda guaranteed home loan?

Answer: These loans are also called RD loans- (rural development)- you must have a 620 credit score but they will finance 100% plus the RD fee of 2%. Property must be in a rural location. Call any lender- ask if they do RD loans- you apply through an RD lender.

Question: If I am denied for a USDA home loan is there any other loan I can get for a home?

Answer: Sure, lots of loans out there, but those are only ones readily available with down payment assistance. If you are denied that, you’re not ready. Better that you save money for your down payment and plan ahead. Rushing into home ownership when you’re not ready for it is a large part of our economic crisis. You need good credit and savings to qualify nowadays. That’s the way it used to be, and is better operating practice than No-Docs loans. There is a first time homebuyer’s credit of up to $7500 when you file your taxes. Smart buyers put this money right on the principal of their loans, increasing their ownership stake in their home.

Question: What’s the advantage of a USDA home loan?
If I only qualify for a 100k with a conventional loan, am I still going to qualify for the same amount with a usda loan? Is the advantage that I can finance the closing cost and any other cost associated with buying a home and also I don’t need a down payment?

Answer: USDA loans are 100% loan programs. You will need to talk to your mortgage person because they have very strict guidelines on income and location (rural area).

Question: Does USDA home loan subsidize your mortgage?
Doing the math I (only) qualify for $102,000 home loan which will buy absolutely nothing in my community. If I use the USDA program will they match those funds or subsidize the loan somehow? I cannot afford to buy a home in my county because I do not qualify for enough money. Does anyone have experience with USDA?

Answer: I can guess that if you can’t buy a home under $102k then you aren’t in a rural area and that’s the only way you can get a USDA loan. You can consider moving to another lower cost area or waiting until you have a larger downpayment.

I’m not sure what “math” you’ve already done but you need to talk to a mortgage broker. You have to pay them but this is what they do. They will be the ones who prequalify you and tell you how much you can borrow. The last thing you want to do right now is get a crappy mortgage that won’t suit your needs for the entire time you plan on being in the home.

If you were wondering if poor credit home loans still exist, then you will want to read this article. Specifically, we will discuss what has happened to bad credit mortgages, where you can go to get a mortgage if your credit is bad, and the best things you can do to improve your chances of qualification. After reading this article, you should have a good understanding of where bad credit loans are today.

A few years ago, if you wanted to buy a home but did not have good credit, you had many options. Mortgage professionals used to joke that if you could fog a mirror you could get a mortgage! There were sub-prime lenders who would lend to people with scores down in the 500′. Lenders offered 100% financing at good rates to people with scores down to 620. There were others who offered no doc and stated income loans. Unfortunately, the implosion of the mortgage market has changed that.

In today’s mortgage market, people with scores below 620 have almost no options unless they have a sizable down payment or are looking to refinance and have a great deal of equity in their homes. Those with scores less than 700 but above 620 are looking to the FHA for mortgages. This is the best place to look for poor credit home loans in today’s market. The benefits of going with FHA is that they will accept lower scores than other non-insured lenders and they place more of an emphasis on your recent credit file. Once you are approved, your interest rate is not generally impacted by your credit score.

If your score is less than 620, unless you have access to a significant amount of cash, you will need to work on improving your credit score. Fortunately, there are numerous things you can do. You will want to start by getting a copy of your credit bureau. You can get this for free at http://www.annualcreditreport.com. Once you have this report, you will want to go over it carefully and notice any errors or negative credit reporting that you feel is questionable. Pay attention to accounts that are reporting late, negative accounts reporting more than seven years after the date of last activity and your credit card limits. Starting with the two or three items that will have the most impact on your credit score, you will want to dispute these items with the three credit bureaus.

Once you have completed your first round of disputes, you will want to continue the process until you have corrected any errors on your report. While you are doing this, you will want to work on paying off as much revolving debt as you can. Paying each individual credit card to down below 30% of the limit is ideal. If you lack positive good credit, you may get a parent or spouse with good credit to add you as an authorized user to an account with a low balance.

While bad credit home loans are not as prevalent today, for people with scores over 620, they still exist. Those with a score lower than this will want to take steps to improve their credit score. Hopefully, you now have an understanding of where bad credit mortgages are today, and what your options are.

Wendy Black Polisi is the founder of creditrepaircollege.com. To learn more about poor credit home loans and credit restoration please visit her on the web.

Poor Credit Home Loans FAQ:

Question: Buying new home but poor credit?
My parents are divorcing and my mom decided to move closer to family which is about 2 hours away. We’ve found several homes but the problem is that my mom’s credit score is around 550. The house we are in right now is under my dad’s name so my mom will be eligible for first time home buyer. Does anyone know a mortgage company that would give out a loan to someone with poor credit? We know the interest rate would be high. We’re just trying to find someone who would help. We have a few names such as Lending Tree, GMC, Quicken loans, And Century point. And please do not say my mom should work on her credit, we already know that but every house we’ve looked at that was for rent would cost over 900 dollars a month. Any information you can give will be greatly appreciated.

Answer: I recommend contacting a mortgage broker or direct lender (such as Bank of America or Well’s Fargo) – rather than Lending Tree or Quicken Loans. Your mom may qualify for an FHA loan, but she may have to get her credit score up a little more in order to qualify.

Question: First time homebuyer/poor credit?
I am interested in purchasing a home, but have somewhat poor credit. Plus, I am a first time homebuyer. What is the likelihood of me being approved for a home loan of $60,000? Are there lenders out there that will lend money to someone with poor credit, considering the recent mortgage crisis?

Answer: Probably not too good if you want my honest opinion. However, it can’t hurt to check out your options and the one thing that you have going for you is that $60,000 is a very small amount.

Question: Poor credit home loan for smaller than usual amount?
I have not-so-good credit- in the 600-620 range. My wife and I are disabled so we’re on a limited income- about 1300 per month combined guaranteed income (disability checks). We currently live in a trailer and pay 200 per month. We found a fix-it-up house that’s in better shape than our trailer, and the price is 15,000.

We started hitting up lending institutions, and we have found that our credit and income is NOT the problem. The problem is the small loan amount. Lenders and real estate agents say the amount is too small, and also the house won’t qualify for VA or FHA backing.

Answer: The reason mortgage companies don’t go that low is it would cost more in processing fees than we can make doing the loan. VA/FHA only allows us to charge 1% origination & 1% discount. This would be $300.00 profit. It costs us way more than that just to process the loan & get it underwritten. You might check with a finance company or credit union but they are not going to lend 100%.

Question: Do I have to have good credit to be approved for a VA home loan?
I don’t know my exact credit score but I’m sure my credit would be considered poor. I looked at the VA website FAQ page and eligibility requirements and it only talks about military requirements not credit. Has anyone gotten a VA home loan with poor credit or know of someone who has? Or does anyone have an intricate knowledge of the inner workings of VA loan approval?

Answer: The VA doesn’t loan you the money…the bank does. The VA only secures the loan. You have to find a lender who will finance it. Each creditor will have his or her own guidelines for credit scores.

Question: I need a home loan and have poor credit?

Answer: The only way to get a reasonably priced home loan is to have cleaned up credit at the time you apply. So, get your credit report for free and find out what is on there that is causing your credit to be poor, and work on fixing those things.

Also see if your community offers first time home buyer education programs. If you complete one of those, you can often qualify for a more generous loan than you would otherwise get if you apply on your own.

With all of the problems of the past year, banks are just not giving out home mortgages to people without good to great credit.

Question: Can I get a bigger home loan with bad credit?
I want to sell my home and buy a larger, more expensive home but my credit is poor. Will my debt to payment ratio help since I have few debts?

Answer: They look at debt to income ratio. If you have bad credit, you might not get another loan for a bigger house.

Question: With poor credit how do I get a loan for $40,000.00 to pay property taxes on my home and pay other bills?
The house was left to me by my deceased parents. It is paid for and must go through probate. I need a loan to pay city taxes on property and other bills to include attorney fees. I’ve been employed with the Federal Government for 19 years. I am seeking a loan for less then 10 years to pay back. I am willing to do an automatic monthly payment.

Answer: There are three choices to consider:
1. Just sell the house and use the money from the sale to pay the back taxes, and whatever is left over to set yourself up in another house or pay for a rental for a long time.
2. Take out a home equity line of credit and use that to pay back the loan. The fees to do this are much cheaper than a full refinancing mortgage, but the payback period is generally no more than 20 years, and sometimes the interest rates are not fixed.
3. Take out a regular 15 or 30 year fixed rate mortgage and pay it back that way.

If you work for the Federal government, there are a number of credit unions that will let Federal workers join, and they tend to offer better rates than regular banks.

Question: Can I get a mortgage loan with poor credit history?
We filed bankruptcy 2 years ago. And Now our dream home is finally back on the market. My (live together for 4yrs) Fiance has a really good job for our area but only been there about 4 mths. We checked his credit score a couple mths ago and it was 534. Does anyone know where we can get a loan with short time on the job and low credit score?

Answer: Not these days. Mortgage loans now are only given to people who have earned the right to have one. The days of giving out loans to anyone who applied ended about 2 years ago. You need to get that credit score up AT LEAST another 100 points PLUS be at the job for one year.

The number of homeowners who are facing the prospect of a foreclosure is rising at alarming rates each day. There are only three solutions for a person who finds it increasing taxing to make his monthly mortgage payments due to financial issues or a person who has missed a payment: home loan modification, refinancing and foreclosure. If one were to rule out the third option; mortgage modification stands out as the most feasible option. So let us analyze the pros and cons of getting your loan modified and how it can help you.

The Pros:

Banks are more willing to grant modification instead of opting for foreclosure simply because there are no buyers in the market.

Since mortgage modifications are designed to help home owners in financial trouble, the lending institution already knows about these issues and so the credit score of a home owner is not a constraint in the process of procuring a home loan modification.

If you are facing financial distress, your monthly mortgage payment can be brought down to an affordable figure through mortgage modification

Opting for a home loan modification does not have an adverse effect on your credit score. On the contrary your credit score will show that you are a trustworthy borrower.

Even though you will need to put in some amount of paper work to get your loan modified is it is not half as much as paperwork needed for refinancing because a home loan modification is not a new loan like refinancing

You can successfully change your adjustable rate mortgage to a low fixed interest rate with the help of mortgage modification.

Cons:

You will have to follow the lender guidelines diligently for your home loan modification application to be accepted.

You will only get one chance to apply for a mortgage modification. So it is imperative to get all the paperwork done correctly.

It takes longer, up to 180 days for a modification to be granted as opposed to the 30 to 60 days required for refinancing.

So all in all the prose of a mortgage modification far outweighs its cons and it is certainly a solution that should be considered if you are facing a foreclosure.

If you are considering mortgage modification, you should really look into 60 minute home loan modification. It is a great resource that contains a lot of important information about the process of applying for a mortgage modification. It was created by a loan modification expert who has modified numerous home loans. The kit included a professional hardship letter outline, and one on one support in case you have any questions. It is a must have for homeowners. To learn more about 60 minute loan modification click here!

Loan Modification FAQ:

Question: My home value has decreased is there a loan modification to adjust my payments to reflect market value?
I have found loan modification that will lower my interest rate, but I’d like the amount of my loan lowered or forgiven. If there are program that does this?

Answer: The make home affordable program is only for those that are delinquent in their payments. If you pay on time and are not behind in your payments then there is no help for you. To re-finance, what you owe must be 80% or less of the home’s value. So if you owe more than the home’s current value you have to wait until value’s improve. I talked to my lender and they could do nothing for me since I make my payments each month. If I stopped making payments then they could modify the loan but it would also be a bad mark on my credit record. One thing I learned that people who are in adjustable rate loans could get a much lower interest rate if the adjustable adjusted right now. Rates are low so lenders are making profit off loans that are locked into an adjustable rate. Right now loans should adjust down unless they are really badly structured loans.

Question: How do I qualify for a home loan modification?
I have a first and second mortgage that is more than the appraised value of my condo. I tried to refinance and now am asking the mortgage company for a loan modification. What is the criteria needed to receive a loan modification?

Answer: Having a both a 1st and a 2nd certainly complicates the situation, especially if the 1st and the 2nd are two different lenders.

I would speak to a law firm that specializes in loan modifications. There are many companies that claim they can help you with a loan modification, but the vast majority of these places are hucksters. If you use an attorney they have to answer to a state bar association if they screw up or mislead you.

You will probably have to show that you are not able to make the two payments on your loans without the modification. Lenders just don’t lower your payment just because the value has gone down. You must be able to prove your hardship. Normally, you have to show that you have lost income or you can’t afford to pay the increased payment due to an interest rate rise on your loan(s).

Question: Will our lender start foreclosure if we are in the midst of trying to obtain loan modification?
We can no longer make the mortgage payment and called Wells Fargo who is mailing a loan modification pkg. to us. Meantime, we will not be able to make the payment. We do not want to face foreclosure. Will Wells Fargo begin foreclosure if we are making a concerted effort to get a loan modification with them? This is very troublesome to us. we want Wells Fargo to work with us, but what happens if they refuse us? Do we have other options or will they offer other options to us?

Answer: Truly, only Wells Fargo can answer this question. Part of the problem with the big banks is that none of their departments talk to each other. Even though you are trying for a loan mod, the department that initiates foreclosures won’t know that and will likely move forward if it’s reached that point. The most important thing you can do at this point is constant communication with them. Call them and let them know you can’t make the payment and you are working on a loan mod, have them note your file in the computer system. This may or may not help. When they call you or send you letter, DO NOT ignore them. Always take their calls and respond to their correspondence, even if it’s just to tell them you don’t have the money and remind them of your loan mod application. Keeping constant touch with them will help.

How far behind are you now? Is this the first payment your are missing? If it’s the first payment, I wouldn’t worry too much about foreclosure proceedings yet, but if you are greater than 90 days behind, then you should definitely be more aggressive with your contact.

Question: How long does it take to get qualified for a loan modification?
Its been two months and they keep telling us its in process. We dont know if we have to move out or not we are two months behind. Any suggestions? Will they foreclose while we are waiting? The Co. is ASC.

Answer: I am sure it must be torture just waiting. But there is no set timeframe. In fact, every lender and every situation is different. You are fortunate your lender is even looking at you for a modification given you are only 2 months behind in payments. Some modifications take several months. Lenders have a ton of modification requests and not enough trained staff and time to handle them all in a quick fashion – so they say.

I presume you have provided the lender with all the requested paperwork? If so, all you can do is wait. But keep calling them as you have already done.

Generally, the lender will not foreclose while a modification is pending. But save your money while this is going on. Do not assume your modification will be approved.

Moving out will not happen overnight. If the lender does opt to foreclose, you will receive very official notification in the mail – regular and certified. And you will be presented with final options.

Question: What website offers a free DIY Mortgage Loan Modification Kit?

Answer: Your lender will do this for you.

Question: Do I have to be behind on my mortgage payments to get a loan modification?

Answer: If you are current on your mortgage, it is harder to get a mortgage loan modification.
However, each modification is look at by an underwriter. If the underwriter feel the borrower can paid the mortgage then they make grant you a modification. Keep in mind the lost of major income can be a big factor if your not currently behind on your payments.

Question: Loan Modification Trial Period?
I am trying to get a loan modification from WaMu (now Chase). They put me on a trial period for 5 months (only supposed to be 3 months), but now they are putting me on a second trial period for 3 more months, but significantly raised the payment price… what is Chase trying to do?

Answer: Chase is obviously looking after their own best interests. You need to get any promises they make IN WRITING, and carefully document all phone conversations with them (dates, times, names, details of discussion). Also, you might want to consider having a loan modification specialist negotiate on your behalf. If so, check them out with the Better Business Bureau before you sign an agreement.

Question: Can someone get a loan modification if a their spouse passed away?
I know someone in this situation. The husband, who brought in the majority of the income, passed away. I know people are getting their loans modified before they are even late. Does anyone know of a special program or legal type of thing that they can do to get this done?

Answer: Probably yes but the bad news is not everyone can qualify for a mortgage loan modification. Loan modifications are designed to help homeowners who can still afford to pay a slightly modified mortgage. It is not supposed resolve all troubled mortgages.

Basically there are 5 requirements to qualify for a loan modification. They are:

1. The home needs to be the homeowner’s primary residence;
2. The mortgage must be less than $729,750;
3. The homeowner is having trouble making their existing mortgage payment;
4. The mortgage was established before January 1, 2009; and
5. The homeowner payment on their first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues) is more than 31% of their current gross income.

Homeowners don’t need to pay a company to obtain a loan modification. However, sometimes it can be better to have someone, such as a lawyer or credit counselor, negotiate on your behalf. A good strategy is to talk to as many experts as you can prior to contacting your bank. Many of these services will give you a free consultation.