PURCHASE HOME LOANS AND MORTGAGES
If you are buying a new home, you probably already know that your monthly mortgage payments will most likely be your greatest personal expense. No doubt, you will want to optimize your cashflow with the lowest rate possible. This website and the nationwide research that supports it, uses a proven eMortgage auction to get the right wholesale lenders to bid for your loan application. If you are purchasing a home with problem credit or income problems - or if perhaps you think your situation is unusual, you might want to check the following table for criteria relevant to your particular scenario.
Low Credit Score
With technology vastly on the rise, more and more mortgage lenders are using "credit scores" as the primary guideline for underwriting and approving loans. A credit score is a number; thus obviously digital in nature and therefore lends itself to automation. Online or off-line, a credit score can easily be entered into a computer program for time saving underwriting.
In the majority of cases, this works well and keeps the costs down for folks with good credit or certain types of damaged or bad credit. However, it's often a deal killer for folks who've been trying to repair or re-establish credit. The formulae used by the three major credit bureaus, Experian (formally TRW), Trans Union and Equifax, are algorithms that satisfy the needs of the majority; but unfortunately outcast the needs of many families, deserving as anyone else, to live the American dream. If the combination of derogatory items on your credit report fall into play in an unfriendly way to these algorithm formulae, your credit scores will be calculated low; making it almost impossible to get a fair deal on a home loan; or perhaps, unlikely to be approved at all.
The eMortgage auction addresses this dilemma by incorporating certain programs that are "credit matrix driven" rather than "credit score driven". If you have a high credit score, the eMortgage auction will direct your file to appropriate "credit score oriented" lenders. If you have a low credit score, your file will be directed toward lenders that underwrite the old fashioned way; more specifically known as "credit matrix underwriting". With matrix underwriting, credit scores are irrelevant.
Problem Credit, Bad Credit
The terms Problem Credit and Bad Credit usually refer to previously good credit that has been negatively affected throuh a time period, several months or even years in a row, during which the individual experienced financial hardship that was not possible for the individual to control. Late payments on credit cards, auto loans and other consumer debt occur throughout a time period. As such the credit problems are caused by an event, usually a period of problem time, a single occurance of cashflow problems; or a string of events causing caseflow problems. The right mortgage underwriting can consider this; and approve an application. If a credit report shows good credit prior to the problem credit and if there is an explanation for why credit will be good in the future, intelligent mortgage underwriting should provide a fair and reasonably priced home loan. The eMortgage auction specifically targets this type of "intelligent" mortgage underwriting.
Income problems are usually caused by misfortune. Ilness, loss of a family member, lapse of employment, career loss; and self employment issues can produce a devestating effect on someone's income, cashflow and credit. Programs within the eMortgage auction can frequently provide a fresh start for people that have experienced hardship as a result of income problems. Extenuating circumstances, "outside of someone's control", can be an explainable cause, and if there is a realistic expectation that the problems have been resolved, eMortgage auction lenders will often provide a home loan with a reasonable and fair rate for the home owner; often regardless of prior income problems, or problem credit.
No Income Check and/or Non Provable Income
"No Income Check" and "Non Provable Income" home loans and mortgages are generally no longer available. However, often non-occupying co-signers can be added to help borrowers having difficulty when proving income is either too complicated or time consuming. Some common applications for these loans are for:
Depending on how long ago the bankruptcy, the greater your chances for a conforming rate mortgage. In addition, there are some wholesale lenders that provide almost conforming rates with bankruptcy discharged or dismissed only one year prior. That is in the case of a chapter 7 bankruptcy. In the case of a chapter 13 bankruptcy, there is usually no need to wait until discharge has seasoned.
If you are currently in chapter 13 bankruptcy, you may be able to qualify for a home loan. In fact, some lenders can actually provide FHA loans at low interest rates for borrowers in chapter 13. re: HUD Handbook section 4155.1 Rev-4. "A borrower paying off debts under Chapter 13 of the Bankruptcy Act may also qualify if one year of the pay-out period has elapsed and performance has been satisfactory, and the borrower also receives court approval to enter into the mortgage transaction."
Depending on how long ago the foreclosure, the greater your chances for a conforming rate mortgage. However, most mortgage lenders are generally more conservative when a previous foreclosure is involved. As a general rule, if the foreclosure is at least 2 years old, wholesale nonconforming rates can usually come fairly close to conforming rates. If the foreclosure is more recent, approvals with higher rates and lower LTVs (Loan To Value) should be expected.
If you are trying to buy a home while your current home is in foreclosure, the following extenuating circumtances and/or compensating factors may apply: Lower Debt Ratio Substantial Down payment Explanation such as illness, loss of employment, family death, If you are trying to buy a new home while a rental property is in foreclosure, consider the the folowing:
Sometimes you can. If you can't prove your income, however, you would likely have trouble qualifying. You can usually borrow up to 50% of the value of your house. However, if you explanation is strong, then you can usually borrow up to 65% of the value of the house. Some people are able to convey a deed transfer to a close friend or relative while simultaneously refinancing the property in the name of that 3rd party. If that individual is credit worthy, often up to 90% of the value of the house can be borrowed which is usually enough to satisfy or otherwise negotiate settlements with the current mortgage company or other creditors. This will often give the distressed homeowner a chance to re-establish some credit and within a year or so, take the house and a new mortgage back into his or her name; thus relieving the friend or relative of any further obligation.
Low Down Payments with Problem Credit or Income Problems
The eMortgage auction is seeing credit scores as low as 570 getting approved for home loans with as little as five percent (5%) down. In addition to that most of those folks are getting their closing costs financed as well. In these case scenarios, people with low credit scores are getting into a home with five percent (5%) total "out of pocket" with the rest financed into a home loan. Some of the lenders bidding for these applications offer a program that not only re-establishes credit, but the if the monthly mortgage payments are made on time, the interest rate goes down each year; and in the fourth (4th) years fixes at a rate just slightly higher than current conforming rates.
Gift Down Payments
For home buyers who've not been able to save up for their own down payment, Gift Down Payments are accepted by many of the wholesale lenders that participate in the eMortgage auction. With these programs, borrowers can receive money from a family member as a gift; and as such, one hundred percent (100%) of the down payment can be in the form of a gift.
No Money Down
There are several ways to buy for "no money down". Here are a few scenarios / programs offered by wholesale lenders that participate in the eMortgage auction.
Closing Costs Financed
In most cases a seller paid concession toward closing costs for up to six percent (6%) of the purchase price of the subject property is allowed. As such, by negotiating the closing costs as part of the purchase price of a home loan, closing costs can effectively be financed.
Unfortunately, secondary financing can no longer be used to substitute down payments, or otherwise simply fill the difference between the amount required to be put down and the amount of cash that a borrower has available to put down. Sometimes with damaged or bad credit, secondary financing would be applied to lessen the LTV (loan to value) of the first mortgage; thus, ultimately lowering the lender's risk to induce a lower interest rate and improve the borrower's monthly cashflow. Often, when a conforming mortgage is used, secondary financing would allow the LTV for the first mortgage to be eighty percent (80%) or less; thus reducing the need for PMI (Private Mortgage Insurance). Sometimes a HELOC, (Home Equity Line Of Credit), would be used and closed simoultaneously in combination with a conforming first mortgage to optimize the amount financed and eliminate the need for PMI. However nothing in this paragraph is found allowable in the mortgage industry at this time.
Seller Held 2nd Loans
No longer available and also known as "Seller Carry Back Mortgages", seller held 2nd loans were once a common form of secondary financing. It simply means that the seller of the property agrees to hold a mortgage behind the first mortgage. In the event of foreclosure, the first mortgage would be the priority lien. Often, in exchange for the risk involved, the seller may desire a slightly higher purchase price for the subject property.
Now only availabe if the deed is being transfered from on family member to another family member. A Deed Transfer/Refinance is much as it sounds. It is a purchase transaction in effect. It is now required that the transfer be made from a family member. A refinance is ordered on the subject property by the new potential owner and the deed to the property is transfered simoultaneously with the closing of the refinance. With the correct set of circumtances, this cab be done as a "no money down" transaction with all closing costs financed into the deal.
First Time Home Buyer
Depending on where you live in this vast nation, there are many state, county and other local programs that encourage first time home buyers to pursue the American dream by offering reduced interest rates, additional financing and even grants that can be used toward down payments. Most of those programs require the borrower to have both good credit and certain provable income. However, the eMortgage auction does involve specific lenders for first time home buyers with damaged or bad credit and non-provable income.
Fast Closings / Fast Cash
Fast closings can be arranged through most of the wholesale lenders that participate in the eMortgage auction. Borrowers enjoy fast closings and eMortgage lenders acknowledge the need for fast closings for some of the following reasons:
Unless you are a military veteran, there are only a few ways of structuring a real estate transaction in order to accomplish one hundred percent (100%) financing. Technically, 100% financing means 100% of the purchase price is financed with the buyer/borrower still having to pay out of pocket about 5 or 6% to cover closing costs. However, most people seeking 100% financing costs are actually looking for about one hundred six percent (106%) financing to effect a "no money down" transaction. There were once many different programs accessable through to eMortgage auction supporting several programs and ways of structuring a "no money down" real estate transaction. There is currently a "bill hopeful" that might be signed by congress to bring back down payment assistance. But at this time it is not available. If that bill does get signed, each borrower's best option will vary depending on credit. Each eMortgage applicant seeking a "no money down" home loan, would be reviewed by an experienced credit consultant familiar with the eMortgage "no money down" programs. As such each is would be treated on a case by case basis in an effort to optimize each particular case for each buyer's home loan. Once available, not at this time, are the following programs / and ways of structuring 100% financing ("no money down home loans") were once supported by eMortgage lenders are as follows:
125% Financing is no longer available
The "no longer available" One Hundred Twenty Five Percent (125%) financing was once available through several lenders that participated in the eMortgage auction. These programs were not designed, nor are they regularly available for people who were purchasing a home. They were refinance tools designed primarly for home improvement and debt consolidation. The LTV (loan to value) that got up to the 125% mark was a second mortgage. Because of the risk factor associated with 25% of the loan not being secured, the interest rates on these second mortgages were relatively high, even with the eMortgage auction. Thus, it was sometimes advisable to consider a complete refinance of one's first mortgage to maximize the LTV of the first position loan. As such, this did usually require the least amount of principal for the second position home loan; which would have usually optimized a home owner's cashflow.
Home Loans after Divorce
Home Loans can usually be obtained by either spouse after divorce for a fresh start for both purchasing a new home or refinancing an X-spouse off of the deed .
Refinance X-Spouse off of Deed / Pay off X-Spouse
Provided you are in agreement with your X-Spouse about a settlement amount; and there is sufficient equity in the subject property, this can usually be accomplished as follows: A refinance is ordered in the name of the soon to be sole owner. At closing the refinance is funded paying off the existing mortgage plus the settlement amount to the X-Spouse. Simultaneously a new deed is transfered to the new sole owner of the property. Often the new owner/borrower is able to draw cashout funds from the same refinance to pay creditors, clear up credit issues and/or cashout for other personal reasons. It is usually also possible to use the same type of refinance and simultaneously add names to the new deed such as a new spouse, family members and/or other third partys that may want to share in the ownership and mortgage responsibility of the subject propertly. This can be helpful if stronger credit of the third party and/or the combined income of joint borrowers, can bring upon a lower interest rate - thus a preferable monthly payment.
Credit Damaged by Divorce or X-spouse
Divorce is probably the most common cause of damaged or bad credit. Some underwriters understand this; and some project themselves saying they understand it - but, actually do not understand it at all. There are so many possible causes for divorce and unless someone has actually experienced it, is it extremely difficult for an underwriter who has not lived through divorce to truly relate to the situation of someone who has. Obviously, everyone's life situation is personal, individual and rarely are any two divorces the same. Human emotions make it extremely complicated. Thus for emortgagesolution.com, we've found success in trying to simplify each scenario the best that we can. "Know which underwriters truly understand divorce and know which do not" - and we refuse to waist time or energy with those that do not understand what another human being may have lived though."
In our experience, we've all too often heard the complaint from mortgage underwriters that they do not believe a particular applicant's credit was damaged or became bad as a result of divorce because there is too long of a damaged or bad credit history prior to the divorce; and as such, the interest rate offered should be applied to a high risk pool or otherwise the application should be refused. We know that sometimes a divorce can be caused by an "overnight" situation. However, it is usually NOT caused by an overnight experience. More often divorce comes from a history and build up of mutual differences as well; mutual indifference. As such, when divorce is involved, and a history of credit problems prevails, interest rates may be slightly higher to offset some lender risk, but not abusive. Again, key to the success of the eMortgage auction, is involving the "right lenders". In divorce cases, we involve only mortgage lenders applying underwriting that truly understands the cause and credit consequence associated with divorce.
Home Equity Loans at Closing
Home Equity Loans and Home Equity Lines of Credit, (HELOCs for short), can often be obtained, closed and funded simultaneously along with the closing of a first mortgage for the purpose of:
Prior Turn Downs
The eMortgage auction is specifically designed to match people with problem credit and income problems with the right lenders. Being turned down previously by banks or other lenders does not disqualify a borrower from participating in the eMortgage auction. The eMortgage auction is designed for this and produces a high ratio of success for applicants who have been turned down elsewhere.
Pay Creditors at Closing - Collections / Charge Offs / Tax Liens / Judgments
The eMortgage auction involves many wholesale mortgage lenders that will allow creditors to be paid at Closing. In most cases, (except for FHA loans), virtually any creditor can be paid at closing. As such, in most cases, (except for FHA loans), virtually any creditor (collections, charge offs, tax liens, judgments and/or other creditors) can be paid at closing. When timely closings are required due to purchase contracts or agreements between a Buyer and Seller, this can help meet those time requirements.
When buying a home, sometimes Home Equity Loans and Home Equity Lines of Credit can be obtained in addition to a first mortgage in order to pay creditors at closing.
In the case of a refinance, of course, most any creditor can be paid at/through closing.
Leave Collections Unpaid at Closing
If you owe money on one or several unpaid collection accounts, certain lenders involved in the eMortgage auction will allow you to close and leave those Collection Accounts Unpaid at Closing if either of the following applies:
Get Pre-Approved / Pre-Qualified
The eMortgage auction welcomes applications for the purpose of getting "Pre-Approved" or "Pre-Qualified. If you are interested in being pre-approved or pre-qualified, please specify so in the comments section of the eMortgage auction application. Once the lowest bidding lender is established through your eMortgage auction, we can request a "Pre-Approval" letter from that lender.