Comparing FHA Financing to Conventional Financing for Owner Occupied Homes

It was 1934, the time of the Great Depression. Franklin D. Roosevelt had been elected President 2 years earlier and he started to establish programs to help the economy and unemployment. These were referred collectively as "The New Deal".

The U.S. Government felt that, as part of "The New Deal", a federal program was needed to increase new home construction and thereby create jobs. This is how the Federal Housing Administration (FHA) was established. This new program did create quite a few new jobs and, consequently, the FHA was off and running.

During the mid 1960s the FHA started to change. They stopped being only an insuring agency for loans and broadened their scope to include the administration of an interest rate subsidy program along with other aid for the home buyer. The Civil Rights Act, also known as The Fair Housing Act of 1968, added to the FHAs ongoing transformation away from being only a mortgage insurance program.

In 1974 the Housing and Community Development Act came into effect. This act significantly changed the Governments role in many aspects of housing and community development. It also made significant changes to the magnitude of the FHAs activities. Changes to this act, going forward from 1974, brought the FHA to the point where it is today.

For the purposes of this article I will only be addressing the advantages of an FHA insured loan when compared to a conventional loan. The criteria for this loan example will be a single family home being owner occupied.

It should be remembered that the FHA doesnt make loans or build houses. It only insures loans offered by private lenders. Mortgage insurance protects lenders against losses that result from defaults on home mortgages by buyers.

This insurance makes it possible for a buyer who cannot qualify for a conventional loan to still be able to buy a house or condominium. Townhouses and condos must be in a HUD approved complex to qualify for FHA insurance. Currently a little over one third (33.3%) of all home purchases in the U.S. are backed by an FHA loan.

There are 3 basic types of dwellings that qualify for FHA mortgage insurance. These are Single Family Real Estate Homes (SFR) - this includes Manufactured Homes (Mobile Homes), Condominiums or Townhouses in HUD Approved Communities and Public Urban Developments (PUD).

A common misconception is that the FHA buyer assistance programs are only for first time buyers. This is not the case. Any prospective home buyer can use an FHA insured loan as long the buyer doesnt have a current FHA insured loan in their name. If they do have an FHA insured loan in their name that loan must have a Loan-to-Value (LTV) ratio of 75% or less. To find your LTV ratio divide the total amount of money that you owe on your home by the appraised value of your home.

You can own rental properties as long as none of them have an FHA insured loan in place at the time you apply for your new loan. As a general rule the FHA insured loan program may insure loans with 5% down payment or, often times, less than that. This is based on the purchase or appraised price of the new home, whichever is the lower. A conventional loan usually requires a 20% down payment.

On a condominium or house that appraises for $150,000.00 the FHA insured loan would require $7,500.00 down at 5% while with the conventional loan the required down payment would be $30,000.00 at 20%. It should be noted that the FHA has additional programs, when combined with their basic loan guarantee, can often reduce the required down payment to substantially less than 5%.

The maximum loan amount will vary and will depend on what state and county the property is located.

Use this link to see the loan limitations for your property by state: This does not apply to Manufactured Homes which have the same limits in all locations - $69,678.00 for a Manufactured Home only, $23,226.00 for just a lot and $92,902.00 for a Manufactured Home with a lot.

In most cases you will have lower closing costs with an FHA insured loan as opposed to a conventional loan. The FHA determines what closing costs can be charged to the borrower at the federal level. The local FHA office specifies the amounts of these fees. This determination is based on what the local office feels the amount charged for these services are reasonable and customary for their area.

The fees that can be charged to the buyer are:

Lender's origination fee Deposit verification fees Attorney's fees The appraisal fee and any inspection fees Lender's origination fee Cost of title insurance and title examination Document preparation (by a third party) Property survey Credit reports (actual costs) Transfer stamps, recording fees, and taxes Test and certification fees Home inspection fees up to $200

Any other costs are generally not allowed, by FHA rules, to be charged to the buyer and are usually paid by the seller. These FHA allowable charges can, and do, change so check with the FHA, your lender or your agent to get the current list.

A buyer can qualify for an FHA insured loan with a much lower credit score than a conventional loan requires. FHA rules governing credit scores state that any application made after October 4, 2010 where the applicant has a credit score of 580 or above is eligible for the maximum amount of FHA financing available. Borrowers with credit scores of 500 579 are eligible for 90% LTV.

The FHA credit rules have just recently gotten stricter. What was acceptable a year or two ago is no longer in effect. FHA loans still offer more leeway in their terms and conditions than most conventional loans.

Interest rates on FHA loans are competitive but, due to the volatility of todays mortgage market, rates can and do change often. Check with your lender, broker or agent to get the latest rates.

FHA rules are subject to change. These were the guidelines at the time this article was written November 11, 2011. Please check with the applicable agent or agency to ensure that they are still current before making any buying decisions.

Strategies To Get A Mortgage With Bad Credit Approved

Preparing For The Mortgage Application Process

There is no avoiding the fact that people with a good credit history, clean of bankruptcies, foreclosures, repossessions and the like get offered the best mortgage deals. The difference in mortgage terms, approvals and interest is because of the perceived risk of the borrower. Because a person's ability to pay is often established by reviewing one's credit history, the possibility of repayment is deemed low with people who have bad credit.

For both first time homeowners and current ones who look to get a mortgage for their new home, the following tips may help you get a bad credit home mortgage approved.

Bottom line, is it possible to get a mortgage with bad credit? YES. Get a real time value appraisal. Getting bad credit mortgages approved requires scrutinized shopping to get the best deal. Mortgage lenders abound in the land but only a few of them offer bad credit loans for a variety of reasons. Be prepared to take some time to find a lender willing to work with your unique history. When shopping to get a mortgage with bad credit, acknowledge that you will not get one immediately and when you finally choose to work with a lender, honesty and a willingness to complete the demands of the process are essential ingredients to success. If you give up after the first loan officer turns you away, the mortgage you wanted to get turns its back on you and so does your house.

Review your credit records. Knowing that you have bad credit is just the starting point. There has to be reasons why you ended up having a bad score. Recall the times when your credit was impacted and remember to be honest. A bad credit history is sometimes influenced by the environment, emergencies, and situations outside of your control. Be truthful with yourself, the causes and negative occurrences. Disclose everything..

Mortgage lenders will often consider the reason why a borrowers credit was ruined. This means that although the credit indicators are not favorable, they still resort to other approval criteria and will take the explanation into consideration. Reviewing your credit records thoroughly allows you to work on the correction of errors in your reports which may help fix your credit score situation.

Spit Polish Clean Your Personal Finances

Aim for financial stability. Exude a demeanor of being able to repay the loan throughout the application process. Prove this by disclosing your job details and how much income is coming in to the household. Truthfully. Outline your money management plan detailing how your mortgage repayment amount will be paid while paying for your other bills in a timely manner. A stable income is essential in making a lender consider your mortgage for approval because it reassures the lender that repayment terms can be met.

When selfemployed, the constant influx of money will need to be documented and proven to ease the loan approval process. In financial terms, you want your Debt to Income Ratio to show strongly - the proportion of your income in relation to your other debts.

Additionally, debt consolidation loans should be considered to reduce your high interest debt and improve how your finances look on paper. Home equity lines can be considered or simply consolidation lenders depending on your need will suffice. Paying off high interest credit card debts and replacing them with a longer term smaller monthly bill consolidating loan improves your financial outlook. By doing so you lower your total debt cost and at the same time, the interest rate does not get the bulk of your earnings.

Learn your options. There are two types of mortgages: the Fixed Rate Mortgage and the Adjustable Rate Mortgage (ARM).

The Fixed Rate Mortgage is the traditional mortgage type that banks and other lenders provide where repayment is done on the principal and the interest of the loan at a fixed rate from the day you sign.

Adjustable Rate Mortgage is another type of loan arrangement where you are the interest rate is adjustable, or will change with time based on the prime rate. The structure of your mortgage loan can vary so be clear what is being offered by your broker.

Both types of mortgages offer their advantages. ARM loans tend to be cheaper with a lower interest rate than can be had with a fixed rate mortgage, but over time locking in a low interest can save you thousands with a fixed rate mortgae. Consider which one offers the most benefits for your current needs and expected ownership period. A lot of online resources are available detailing the benefits and negatives of choosing a fixed or adjustable rate mortgage.

Help To Get Bad Credit Loans

Consider borrowing from the government. The Federal government, through the Department of Housing and Urban Development (HUD) has a variety of mortgage loan programs to offer. This is in addition to the programs offered through chartered lending agencies offering bad credit mortgages to induce home ownership. Because the goal of these programs is to provide affordable housing options, flexible mortgage payment options or firsttime mortgage programs entail a lower financial burden for the borrowers. Note; Government mortgages have their own unique qualification standards that can make getting a goverment mortgage very difficult, even though bad credit is often accepted.

Go online. Mortgage resources are available online about lenders who especially cater to mortgage financing for people with bad credits. Their terms vary but they work hard to make borrowers welcome as appreciated customers. Because the online mortgage lenders are using competing strategies to win your loan business, the consumer wins. Work with someone who has a proven performance in the market despite the tough times and who works with people well. There is no need to have a combative relationship with your broker, he should be on your side, your trusted partner. The careful selection of your lender is vital.

Make your financial preparations. A down payment is usually required for people getting a mortgage with bad credit. Expect for both the down payment and the interest rate to be high, period. It is part of the reality we must live with having bad credit. With your financial assessment complete and cost projections available, ensure that these bills can be covered.

Get a co-signer. A person who trusts you and who possesses a good credit rating can co-sign the mortgage application with you. This gives the impression that the borrower is intent on making payment to the loan which is reinforced by the co-signer's cooperation and records. Be aware, this puts your trusted co-signer on the hook for the mortgage in the case you default, potentially ruining their credit.

Consider Mortgage Altnernatives. The mortgage offerings for people with bad credit are limited, there is no sugar coating it. Consider owner financing opportunities and creative home buying strategies outlined in our how to buy a house with bad credit guide.

Bad Credit Mortgage Bottom Line

Because mortgage lender policy varies, the above recommended strategies serve as a best practices to ensure an easy and speedy mortgage approval. There is no set in stone technique on how to get a mortgage with bad credit 100% of the time, but understanding what the lenders look at is the first step to success..

Visit our recommended bad credit home loans, we review mortgage lenders for people with bad credit for the best rates, approval flexibility, and loan options, get started today...

Bad Credit Mortgages Contribute To Rising Repossessions

Repossession numbers in the UK are on the rise and are expected to increase further during the current year. Some analysts are putting the blame squarely on bad credit mortgages and the loose lending criteria of the past five to ten years.

It is estimated that up to sixty thousand homes could be at risk of repossession during this year alone. This is double the number of home owners that were at risk last year. Properties at risk of repossession are calculated as belonging to home owners who pay more than three quarters of their monthly disposable income on their mortgage repayments.

While this number has doubled since last year, analysts are quick to point out that it falls short of the seventy five thousands homes that were repossessed in 1991. This is widely regarded as the worst year for the property market in the UK in modern times. The UK economy was in dire straights and interest rates were high due to controversial macroeconomic policies that were being implemented at the time.

While the estimated number of homes at risk during this year falls short of the number in 1991, it is still high. Now that the credit crunch is in full swing and financial analysts have begun to analyse the problem rather than deny its existence, many are concluding that bad credit mortgages are to blame for the increasing number of home repossessions.

Bad credit mortgages is a term used to describe the home loans that were issued to people with poor credit histories. These mortgages were issued with little reference to the credit files of the applicants as interest rates were historically low at the time and the repayments that the home owners were due to make seemed manageable.

However the interest rates attached to the mortgages were usually fixed and discounted for a short period of time. Now that the honeymoon rates on most bad credit mortgages have expired and interest rates have crept upwards borrowers have begun to struggle to keep up with their monthly payments. Hundreds of thousands of home have now been repossessed in the USA because of the credit crunch, and it is apparent that many of the homes were financed with bad credit mortgages. A similar scenario is now occurring in the UK as home owners simply give up trying to fund their mortgage payments each month.

However, just because sixty thousand homes are said to be at risk, it does not mean that they will be repossessed. Less than thirty thousands properties were repossessed last year, which represents about a quarter of a percent of all mortgaged properties. With the UK authorities in the midst of an interest rate cutting trend it may be the case that enough relief is on the way for struggling households that the actual number of properties repossessed this year may not exceed last years figure.

Whatever happens to the repossession rate, bad credit mortgages have received a lot of negative press due to the credit crunch and the potential problems it may cause over the next few years. Lessons must be learned by both lenders and home owners regarding the safety of bad credit mortgages so that the same scenario is not repeated in the future.

How to Use the Internet to Save on Car Financing

So you want to get a car. Each year, a lot of consumers submit an application for loans to fund their car purchase. A car can be considered as expensive investment, next to your house. How would you make certain in which will find an inexpensive car loan deal to save cash? Consider the following pointers:

Search on the internet. The internet is an excellent tool for comparing deals - regardless if you are trying to find a personal loan, a car loan, or mortgage. You can simply compare car loan lenders online by going to a brokers website or looking into a car loan companys website. Most lenders offer free loan quotes to help you have a better idea regarding the cost car financing will cost you.

Check the loan providers background. Take note that its not all lending companies that offer car loans are legitimate. In pursuit, you will come upon fraudulent lenders that provide attractive car loans especially to individuals with bad credit. If you cant get approved for the regular car loan because of low credit score, quick car loan advertisements can be enticing.

Before requesting for any car loan quote, take the time to research regarding the lending companys reputation. Is the lending company reputed to provide reasonable loans to consumers? How long has it been providing financing services? Is it licensed and identified by the government?

Can it be registered to the Better Business Bureau (BBB). You can confirm the BBBs site to look at lending companys rating and gratifications. If there are complaints or lawsuits filed against a lender, you will be able to check it on the BBBs record.

Do further research. After exploring the market, define your options to at the very least three different car loan lending companies. Be ready to execute a bit more investigation about each lenders policies, conditions and terms.

Read the terms and conditions to make sure that you won't be subjected to hidden fees and unreasonable terms. Remember that each finance company possesses its own set of rules so its necessary for you to understand the actual terms right away.

Avoid multiple loan applications. Dont try your luck or see which lender grants the fastest approval by submitting multiple applications to several car finance companies. Do your research first and when you have found a prospective lender, thats the only time you should submit an auto loan application.

Be sure to look into the lenders requirements particularly about your personal credit score and credit history. Some car loan lenders have strict standards and only grant financing to people with good or excellent credit. If you have an imperfect credit score, submitting the application to wrong lender can result in rejection.

Look at your credit rating. It is likewise a smart idea to order a copy of your personal credit report from the three major credit bureaus (Experian, Equifax, TransUnion) just before submitting your car loan application. This way, you will be aware of one's exact credit score. If you might not yet received your free report this year, you can order it from www.annualcreditreport.com.

Get Pre-approved For A Bad Credit Home Loan

Right now, could you tell how much you can safely borrow yet still manage to stay out of overwhelming debt? That is basically what you will learn when you go through a pre-approval process for a bad credit home loan. Pre-approval requires that you submit your financial information to a home loan lender before you start shopping for a home. The first thing you should do is get copies of your credit reports from TransUnion, Equifax, and Experian. (You should be able to get free copies from each of the three primary credit rate reporters.) Check for discrepancies and get them fixed.

Pre-Approved Bad Credit Mortgage Shows Much

When you leave the office of the lender, you will know how much you can safely spend, at what interest rate, at what down payment, and under what repayment terms. If you want to get some idea of the amount of money you would be able to spend before you even go to the lenders office, you might want to go online and get one of the free home loan mortgage calculators available. That will help you see what you would have to pay if you got to borrow as much as you want. It will be a sobering exercise.

Processing of Pre-Approval for the Bad Credit Home Loan

To get pre-approved for a bad credit home loan, you will first submit a typical loan application. Therein you will mention your personal and financial goals. You will also present documentation such as a purchase agreement (for your present home, if applicable), tax returns, and household expenses. You will also have to give account for your present poor credit, bring bankruptcy papers (if applicable), and, of course, copies of your credit reports.

Lender Verification for Pre-Approval of the Bad Credit Mortgage

The lender will look over your application and the appended paperwork. The lender will verify the application by checking on your employment information, financial status, credit history, liabilities (debt), and assets (property you own). Once all the verification is finished, you should receive a written documents outlining the amount you can spend, the interest that could be imposed, the down payment required (if any), and the repayment terms (usually the amount due every month for so many years).

Other Pre-Approved Bad Credit Loan Considerations

The financial market is such nowadays that there are mortgage brokers who specialize in pre-approved bad credit home loans. Depending on the lender, there may be a processing fee for the pre-approval. This fee will most probably include administrative costs, closing costs, and appraisals. Closing costs usually include such things and title searches for deeds, legal fees, and document processing.

Benefits of Pre-Approved Bad Credit Loans

Plan ahead, the pre-approval process can take from 60-90 days. You may dream of being able to walk into a house and just write a check right then and there for the home you like. A pre-approved loan is almost the same thing. It gives you strong negotiation powers. Also, it takes a lot of the angst out of the home buying itself. Basically all you have to do is the shopping, knowing that everything else is ready to go.

Unsecured Personal Loans Help Those With Bad Credit Start A Small Business

Nowadays finding a job can be rough, which has led many entrepreneurial spirits to consider starting their own small business as a means to guarantee job security in a tough economic time. However, for those with bad credit, this proposition is not so simple. Despite trying to contribute to this rough economy with a new business, poor credit in the past can lead to denials in terms of obtaining funds. However, an unsecured personal loan designed for those with bad credit can be the answer to finding the funds a new business needs.

There are many points that you need to know about locating and obtaining bad credit loans that this article will review in the hopes of giving you the tools you need to get your business started off on the right track.

The Basics

So what is an unsecured loan? How does bad credit factor into it? These are great questions. First, an unsecured loan is one that lacks a collateral backing. That is, those who take out unsecured loans offer no guarantee to the lender of their repayment other than their good word. Therefore, credit scores can and do come into major play since a poor credit history will lead a lender to think you will not be able to make the payments on your loan.

That is where bad credit unsecured loans come in. These loans are specifically designed as an answer for those whose credit scores are less-than-stellar but who may not have the collateral, such as a home or land, to leverage in a secured loan. Lenders offering bad credit personal loans are used to dealing with people who have had credit problems in the past and will be more willing to help you and coach you through the lending process.

The Use of Personal Loans

Of course if you are interested in starting a small business your purpose for taking a personal loan is business-related. However, many other people with bad credit can use unsecured personal loans for any number of reasons. Because these loans have no collateral attached to them, there is no need to explain their purpose.

Many people use unsecured personal loans to consolidate debt, which serves the purpose of improving their credit score in the long run. Even if you do not choose to use this type of bad credit loan for your business, taking care of your own debt obligations and improving your credit will help you in getting the business loan you do need.

Getting a Bad Credit Loan

There are a lot of lenders on the market today, especially if you look online. That is why it is of the utmost importance to do some research and investigation in order to find the right bad credit lender to finance your small business. You can conduct this research through lending comparison sites which will allow you to look at several packages side-by-side to determine which one is the best to fit your needs and budget.

Once you choose a lender, you will need to fill out several forms that ask for personal as well as business information. It is important to have a source of income to help finance the start-up of your business or other investors that will provide the lender with some additional security in terms of offering the loan. One thing to remember about bad credit loans is that their interest rates will be higher due to your poor credit history.

Final Thoughts

Now is a great time to start a small business, even if you have a bad credit past. There are lenders who will work with you to obtain a bad credit loan to finance your business and get you on your way to living your dreams.

Brisbane Property Accountants 5 Ways they can help

When you are looking for someone to help you with your specialized financial business needs, Brisbane property accountants can help. There are five areas in which a property accountant can be one of your most valuable assets. These are some of the things a good property accountant can help you do:

1. Create Financial Growth

A Brisbane property accountant can help increase your revenue and build your wealth. By providing professional, tax-effective investment strategies to maximize your wealth while staying within the confines of the law, a property accountant can help increase your earnings significantly. You want your business to be as successful as it possibly can. And finding a great accountant is an important strategy in and of itself.

2. Increase Profit margins

A Brisbane property accountant can also help you increase your profit margins by improving the profitability of your business, and ensuring that you pay the minimum tax amounts required. By using the professional tax structuring, tax preparation services, and the benefit of someone with accounting experience, you can ensure continual growth of your assets. When you want to increase your profit margins, an experienced accountant can help tremendously.

3. Free up Cash

When you need to free up some of your money to spend, a Brisbane property accountant can help. Whether you need money for continuing education, taking a holiday or to reinvest into your business, there are property accountants who can make this happen sooner than you might expect. There will always be times when you need a little extra cash, and a good accountant can help you figure out where you can afford to spend less to create the free cash you need.

4. Protect your Assets

There are Brisbane property accountants available to help you protect your investments. By using advanced strategies for clients, including establishing family trusts, companies, and debt protection agreements, the best property accountants will protect all your assets. Youve worked too hard to leave yourself vulnerable financially, so make sure you find the best accountant to protect the assets youve created for yourself.

5. Transfer of Ownership

If you are dealing with selling your business or creating a succession plan or an estate sale, there are Brisbane property accountants who can help. These can be complicated areas, where you want to utilize the expertise of someone with experience in property accounting. With their knowledge a laws regarding transactions of these types, a property accountant will prove valuable to making sure all goes smoothly.

Using these five strategies, experienced Brisbane property accountants are there to ensure the success of your business. Finding a knowledgeable accountant who specializes in this area is essential to making the most of your business.