Why Do I Keep Getting Declined

Loan qualification is not such a complicated business; so, as long as you know what’s going on you may be able to foresee the results of your application. There are some very common reasons for loan denials as well as corrective measure to avoid them. Read on for some existing alternatives that suit low and moderate-income homebuyers.

Reasons For A Loan Decline

Sometimes it isn’t only the debt amount owed by the applicant that prevents qualification for the loan. Extensive credit card usage and revolving accounts indicating increasing account balances approaching the credit card limits can kill the prospects. You need to show moderation to lenders in order for them to confide in you.

Bad Credit History

Bad credit reports featuring frequent late charges, past due accounts, judgments and bankruptcy can reduce chances of loan approval. Guidelines on debt ratios and income requirements are one thing but tolerance of bad credit record, is a different story. Low loan-to-value ratios and debt ratios cannot compensate an unsatisfactory credit history.

No Credit History

Lack of an established credit history can cause problems in loan approval. Even without negative aspects, no record of timely loan repayment or charge accounts is as bad. In such a situation, there is hope of a non-traditional credit history. This involves the lender depending on utility companies, landlords both past and present, among other sources to verify your timely, consistent repayment. If this hasn’t occurred to your lender, suggest it.

Percentage of Financing

The ratio of the loan to the sale price or appraised value of the property whichever is lower, is one of the lender’s considerations. Appraisal of property being substantially lower than purchase price, the loan-to-value ratio (LTV) may be more than the lender can legally approve. For a maximum loan amount, 90 to 95 percent of the purchase price, a low appraisal could make the desired loan too high. Here your options depend on the reasons for the low valuation.

One Loan Decline Is Not The End

One lender’s rejection need not ban you home ownership for good. There’s a lot you can do to improve your chances. Some of these measures may be done quickly while some may take time. However, most problems can be corrected. Take your time and analyze the possibilities, the reasons why your loan request was turned down and do whatever is necessary to rectify that problem.

In order to get approved you can resort to many different means. The most important one is to improve your credit score by applying for small loans and paying all the installments on time. This will create a good credit history. However, If you don’t have the time, you can try offering some kind of collateral like a car or a real estate property or you could apply with the aid of a co-signer (with better credit history and score than you) as this will provide the lender with greater security.

When is the Best Time to Move

As Realtors, we are often asked, "When is the best season to move?" This is a tough question, one we cannot answer for you. Most people are asking about price, do they fluctuate throughout the year? NO. Just the number of homes on the market changes; of course the number of buyers changes as well. Hopefully this article will help you make this decision for yourself and your family.

Time of Year

A common "urban legend" is that you get more money for your home in the spring. This is simply not true. Seasons have no bearing on how much you get for your home, but it does affect how much competition you have. True, more people look to purchase a home in the spring. At the same time, there are more homes on the market for you to compete with. Unfortunately, this is also the time of year when all the "window shoppers" are out. These are people looking for renovation ideas, or who are just "killing an afternoon" looking at open houses. In the winter you will have fewer showings... but they'll be serious buyers. So, should you NOT sell in the spring? Not at all. There is no good or bad time of the year to sell your home. The best time is when you are financially and emotionally ready to move. Not before, and not after.

Children

Many parents wait until the end of a school year before moving the family. At first glance, this makes a lot of sense. Let them finish the year in comfortable surroundings, and don't disrupt their lives until summer holidays have begun. But consider this... Children need friends to play with. By moving the kids a couple of months BEFORE the end of the term, they have the ability to meet their new friends in the new neighborhood. By having these friends, the move will be easier and less confusing for the children. And parents?!? If the kids have friends to play with... they won't be underfoot while you're trying to unpack and organize the house!

Time is on your side

The very fact that you have time on your side could save you thousands. Many sellers that have waited have put themselves in a "have to sell" situation, and have had to accept offers for less than what they wanted. The fact is, when you have time on your side you won't feel pressured to accept an offer that's less than what you want.

Your next property could cost more

If you're buying a new property that's more expensive, you could cost yourself plenty. For example, let's say you're selling a $100,000 property and looking to buy a $150,000 property. If both properties appreciate at the same rate of 3% over the next six months, you gain $3,000 on your existing property. However, the $150,000 property will now cost you $154,500 or a net loss of $1,500. The best suggestion is to get into the home you want; before it gets out of reach for you!

About The Author

John Carle & Sharon Gregresh are Realtors with Royal LePage - ArTeam in St. Albert, AB. They pride themselves on providing more than just real estate sales and listings. Their clients benefit from a much larger spectrum or real estate services. Contact them any time at information@workingtogether.ca or through their website at www.workingtogether.ca They can be reached by phone at (780) 458-5595

Tags: mortgage, mortgage loan, home loan, mortgage tips, financing, mortgage financing, real estate, realtors, mov

When Investors Become Victims of Fraud

A young investor from Atlanta got excited when he heard about a “deal” in Macon, GA. (about 90 miles south of Atlanta)

The property – 2 Duplexes and one single family house. The prices seemed to be a steal compared to Atlanta real estate – only $65K for each duplex and only $45.5K for the house. He didn't know the market at all, but everyone involved was assuring him that this was a great deal.

The mortgage broker, a local Atlanta fella with access to lots of investor loans, was only too glad to help the young investor secure a low doc loan at an interest rate slightly above 10%. The year is 2001. (note: Low doc loans can carry higher interest rates because you are not required to verify assets or income to qualify, but even so, higher rates can kill a deal even when there is no fraud involved. In this case, it only makes matters worse.)

Everything went smoothly and according to plan. The seller was cooperative, a contract was signed for each property, a local closing attorney was already chosen, an appraisal was ordered, and all the pieces just fell into place. The young investor was pleased with all the service. He did not have to worry about a thing. Everything was handled for him.

He had no idea that everyone from the seller to the appraiser to the closing attorney was involved in a real estate mortgage scam that was about to take our young investor to the cleaners, and leave him holding the bag on three properties worth only a fraction of the “appraised” value.

Since the deal was in Macon, and the young investor was busy working full time in Atlanta, he had little, if any time to get down to the Macon area. So, since things were going so well, he tended to depend on the support folks who were working so hard to help him out. After all, he didn't know the Macon market really well, but he figured that with these prices being half what they are in Atlanta, he couldn't go wrong.

This was his first mistake.

Soon after closing, the investor realized he was having a problem renting the properties for enough to cover the mortgages. A trip down to Macon to check things out revealed a sickening situation. The properties were in the worst part of town and were in terrible condition.

The confused investor checked his closing documents. The appraisal, dated one month before the closing, 11/08/2001 indicated that each property was worth exactly the purchase price as stated above. There were comparables that indicated that there were plenty of similar properties in the area also selling for 65 thousand dollars.

As the now concerned investor soon realized, after spending some time carefully reading his previously unread appraisal, things were not as they should be.

For starters, the date on the cover sheet of the appraisal indicated that the appraisal was done just prior to the investors closing date. But, the signature page on the back of the appraisal indicated that it had been done eighteen months earlier. It appeared that the appraisal had actually been used for a previous transaction.

The appraiser who signed the documents was only a new, or “registered” appraiser.

In Georgia, a certified appraiser should have inspected the work and signed off on it. But there was no such signature.

As if that were not enough, the comparable properties used to establish the market value were miles away, and not even located near the subject properties. The zip codes had been changed to make it look as though the comparables were in the immediate area. They were over 8 miles away, even though the appraisal data said they were less than 5 miles away.

In short, the appraisal smelled like an old fish wrapper in the hot Georgia sun.

Did I mention that the properties being purchased were not worth the 65K as shown in the appraisal. To his horror, the investor soon discovered that his new properties were only worth $15,000 apiece!

He was slowly starting to realize that he had been duped. Now he was left owing $180,000 for three properties that were actually worth $45,000 total.

How could such a terrible mistake happen? What about the closing attorney? He works on behalf of the lender. Didn't HE realize that the lender was loaning way too much money for these houses? Why didn't the mortgage broker catch this? HE was the one who worked on the loan. And, anyway, WHO hired the appraiser? What about the seller? How on earth could he expect to sell a $15,000 house for $65,000? Something was terribly wrong.

As it turned out, virtually everyone involved in the transaction was also on the take. No wonder this was such a convenient, full service deal for the investor. Everyone was setting the buyer up. The investor had great credit and good income. He was a class A buyer. Just the kind who is a juicy target for these predatory types who troll the investor clubs like great white sharks looking for an unsuspecting meal.

The parties involved in this fraud pocketed the money from the loans.

This investor will have no easy or penalty free way out of these deals. He will still face foreclosure or possibly bankruptcy, even though the seller wound up in prison, and the attorney lost his license to practice law. But all of that was not enough to get our victim out of the financial obligation that had been created when he signed the closing documents. The lender who ponied up the funds still expects to be paid back. And the courts are not sympathetic to careless investors who get taken.

The only way to protect yourself is to protect YOURSELF. Don't obligate yourself to financial transactions unless you have verified all of the essential details. As always, common sense and a prudent approach always work best. If you do not understand the terms of your deal, get independent, third party advice, even if you have to pay for it. And, read my article on avoiding loan fraud by verifying the appraisal data.

The moral of this story is - “If you don't check up on the details of your deal, no one else will. And if you are careless enough, you will be eaten by the investing sharks faster than a swimmer in a Stephen Spielberg movie.”

Donna Robinson is a real estate investor, author, and consultant located in Atlanta Georgia. You may read more of her articles on her website at http://www.RealEstateInvestorHelp.com or you may contact her by email at drobinson@reihelp.com or call 404 542-9903.

Tags: real estate investing, real estate, mortgage lenders, mortgage financing, real estate fraud

What to Worry About When Renting a Home

As a landlord, when renting your home you can run into several problems. Some tenants may even appear to be the perfect match for you and your home until after they move in and you see what they are really like. The following are several problems you can run into when renting your home.

One of the biggest problems a landlord can face is late payments. Even if the tenant appears to have perfect finances and good references, they can still be late on payments. It is best to document each late payment on behalf of the tenant so you can have ground for an eviction notice should it become necessary.

If you are renting a fully furnished or partially furnished apartment or home there can be problems as to what is your and the tenants when it comes time for the tenant to move out of the residence. Therefore, it is best to clearly state in writing at the time of renting what cannot be removed from the residence. This will help to give you a legal recourse in case something is removed if the tenants do not notify you.

Another common problem is that of improper removal of garbage. If garbage is not collected, not only does the area become unsanitary but also your property can begin to look run down. Therefore, in the contract state how often garbage must be removed.

Along these lines, cleanliness can become an issue with tenants. This cannot only become a health hazard to your tenants but also to the neighbors as well. Therefore, set clear cleanliness guidelines in the contract.

Tags: real estate buying, first time home buyers, real estate trends, buying a home, mortgage financing

What To Look For When Buying Home So Many -- but They're Necessary

A foremost consideration for what to look for when buying home would be your funds. It’s easy to spot what kind of a house you’d like to make your new home -- no need for education there, just a matter of taste -- but how much could you afford to buy is another matter altogether that should not be ignored. You cannot go out and make an offer on a mansion that’s in the heart of the city, definitely not when you are working on a budget that’s a pittance. Finance wizards will tell you readily that you should not buy too much of a house when you don’t have the money for it.

Now, when you have considered the limitations of what you could actually afford, the next step to do in your list of what look when buying home would be location. The property you are about to buy should be in a place that’s just “a stone’s throw away,” so to speak, for the sake of convenience. Take into consideration that, since you’d be shelling out a big slice of your liquid assets to pay for the house up front or for down payment (if it’d be on an installment basis), you won’t have too much left for other basic needs like transportation for yourself and your family, for example. Even the time you’d have to spend stuck in traffic would be precious commodity if your house would be located too far from most of those places you frequent, like your place of work, the church you go to on Sundays, the marketplace and malls where you have to do your shopping, and a good school for your children. So consider strategic location seriously.

Last, but not the least, in your list of what to look for when buying ahome would be comfort and beauty. Of course, you’d want to be the proud owner of a home that you would not hesitate to show off to your friends or to your boss or, if you’re single, to your boss’ single daughter you might have been drooling over, too, for some time now. Your house should not be garish. Keep in mind that a house that is “garish” is tasteless and ugly, and does not give a good impression of the owner. Simple and practical are beautiful -- opt for simplicity and functionality in your house style and in your choice of furniture and fixtures, and you’d earn the admiration of your peers and higher-ups. Your home is an extension of yourself. It is a place of your comfort and peace of mind. Do not make it anything less by a display of poor taste.

What Is A Home Equity Line Of Credit

If you have a home that you have been paying on for several years you may have a lot of usable money (home equity) right under your nose? A home equity loan just may be the perfect way to get your hands on that money to use for paying off those high interest credit cards, home improvements, college tuition, etc.!

Here’s an example of how a Home Equity works: Let’s say that your current home mortgage was originally for $250,000. After several years of paying on that mortgage you now only owe the mortgage company $150,000. In this example, you would have $100,000 in equity in your home. But lets also factor in inflation. Say your current home will appraise, today, for $325,000.00. This means you have a total of $175,000 equity in your home. Most lenders will let you borrow up to a maximum of 80% of the total equity - which in this case is: $325,000 x 80% = $260,000 less your first mortgage balance of $150,000 will equal $110,000 of equity you can borrow.

A home equity loan is a specific type of loan that will allow you to borrow against that "equity" you have built up in your home. Actually there are two "types" of equity loans to be considered. Home equity loans and a Home Equity Line of Credit.

“What’s the difference in a Home Equity Line and a Home Equity Loan?”

A Home Equity Line –
* A line of credit amount established on revolving, variable rate basis. Only requires a minimum payment amount. NOTE: Works very much like a credit card product with the minimum payment feature and a revolving term. * Not intended to payoff at a set maturity date.
* Intended to utilize the equity in the home, usually to qualify as a home mortgage interest deduction (to be determined with your tax consultant). * Not recommended to use to consolidate credit card debts.
* At maturity date, remaining balance is renewed into new home equity line.
* Can usually be obtained with no closing costs promotions at lending institutions.(Most do have a prepayment penalty clause if loan is paid off in short period of time to collect their costs).

A Home Equity Loan –
* Fixed Term and Fixed Rate (usually 36 months – 180 months, depending on lender)
* Utilizes the equity in the home, usually qualifying as a home mortgage interest deduction if qualifies (to be determined by your tax consultant). * Can be first or second mortgage loan.
* Pays off in full at maturity date, and can be accessed by payment book or automatic payment with lending institution.
* Recommended for use when consolidating consumer debts, especially credit card debt, so that will be eliminated when loan paid off.
* Can usually be obtained with no closing costs promotions at lending institutions. (Most do have a prepayment penalty clause if loan is paid off in short period of time to collect their costs).

Why would you want borrow more money out of your home? The number one reason that people take out home equity loans, or home equity lines of credit, is to consolidate their debts. Because a home equity loan is a secured loan, the interest rates are considerably lower than that of credit credits or even personal loans. So if a person had the average credit card debt of say $10,000 they could reduce the total amount of their monthly payments AND reduce how much they owed by taking out a home equity loan, or home equity line of credit. You would then use the cash to pay off your credit card debt and reduce your indebtedness by greatly reducing the amount of your "nondeductible" interest you will pay over the next several years.

Another great reason for taking out a loan of this type is to make improvements on your home. Have you been thinking about remodeling your bathroom, or the kitchen, or maybe adding a swimming pool to your backyard? A greenhouse, or studio to your yard or maybe a sun room? A home equity loan is a great way to finance these types of projects.

Your first step should be to talk to your current mortgage company or your local Bank about your options, but don’t stop there. You will quickly find that there are plenty of Banks and other lenders who are willing to make you a Home Equity loan or extend you a Home Equity Line of credit. So you should shop around for your the best deal - and there are plenty of good deals out there!

Michael Domeck was a multiyear sales and listing award winner for Century 21 and has designed and built many homes over the years. His wife has been doing mortgage financing for over 20 years. Together they can show you what all the "mortgage hype" is all about. Find out the secrets to getting the best mortgage financing at the best rates and the lowest fees. Learn why re-financing may NOT be the best way to go and why!

Tags: home equity, mortgage financing, equity loan

Top 7 Reasons Why FSBOs Fail To Sell Their Home On Their Own!

In the United States, less than 10% of all For Sale by Owners (FSBOs), are successful in selling their home by themselves. That*s because most people just give up because they don*t realize from the beginning the difficulty and complexity of the job ahead. But that*s not the only reason. Here are the seven most common mistakes FSBOs make when selling their home.

1. Failure to price a property at what market conditions will bear.

The number one reason that most FSBOs don*t sell their homes is that they price it too high. Many start counting the money they*re saving on commissions and how much their sale will net. If your house is priced higher than other comparable houses in your market, you will not get the offers you need to sell!

2. Underestimating the time, energy, know how, ability and effort needed to sell a house.

One of the keys to selling your home effectively and profitably is complete accessibility. Many homes sit on the market much longer than necessary because the owner isn*t available to show the property. Realize that a certain amount of time each day is necessary to sell your home.

3. Not being prepared to deal with an onslaught of buyers who perceive FSBOs as targets for *low balling*.

Another challenge of selling a home is screening unqualified prospects and dealing with low-ballers. It often goes unnoticed that much time, effort and expertise is required to spot these people quickly. Settling for a low-ball bid is usually worse than paying any type of professional fee or commission.

4. Lack of knowledge about financing options for the buyer.

Are you prepared to answer questions about financing? One of the keys to selling is having all the necessary information the prospective buyer needs and to offer the buyer options. Think about the last time you purchased something of value, did you make a decision before you had all your ducks in a row? By offering financing options, you give the homebuyer the ability to work on their terms. You*ll open up the possibility of selling your home quicker and more profitably. It*s critical that you locate and establish relationships with a network of financing experts that will help you accomplish your goal profitably.

5. Not fully understanding the legal ramifications and all the necessary steps required in selling a home.

Many home sales have been lost due to incomplete paperwork, lack of inspections or not meeting your state*s disclosure laws. Are you completely informed of all the steps necessary to sell real estate? If not, you may want to consider consulting with a legal or real estate professional.

6. Lack of experience in handling the legal contracts, agreements and any disputes with buyers before or after the offer is presented.

Are you well versed in legalese? Are you prepared to handle disputes with buyers? It is always wise to put all negotiations and agreements in writing. Many home sales have been lost due to misinterpretation of what was negotiated.

7. Not contacting the necessary professionals... title, inspector (home and pest), attorney, and escrow company.

Are you familiar with top inspectors and escrow companies? Don*t randomly select inspectors, attorneys, and title reps. Like any profession, there are inadequate individuals who will slow, delay and possibly even cost you the transaction. Be careful!

Selling a home requires an intimate understanding of the real estate market. If the property is priced too high, it will sit and develop a reputation for being a problem property. If the property is priced too low, you will cost yourself money. Some FSBOs discovered that they lost money as a result of poor pricing decisions. In the final outcome, these mistakes far outweighed the commission they would have paid.

About The Author

Lawrence Allen has over 15 years experience as a marketing professional and a successful real estate investor. His experiences with numerous real estate, marketing and finance professionals has enabled him to develop a marketing system and Ebook for people trying to sell their home on their own. The For Sale By Owner (FSBO) Hassle-Free Home Sale System has received many praises from real estate professionals and home owners alike: http://www.fsbosaleshelp.com

Tags: mortgage, mortgage loan, home loan, mortgage tips, financing, mortgage financing, real estate, realtors, FSB