12
Oct
By First Rate Financial Group
Home Mortgage Tips

How to Use a Mortgage to Buy a Home After Going Through a Bankruptcy

How to Use a Mortgage to Buy a Home After Going Through a BankruptcyWhile it is sometimes the best option to get your finances repaired, the bankruptcy and following discharge period can be tough. However, while it may delay things for a couple of years, the good news is that even a bankruptcy won’t stop you from borrowing a mortgage to buy a home. In today’s article, we will share some insight into how you can get a mortgage loan after going through bankruptcy.

Step 1: Get A Professional Credit Assessment

Once your Chapter 7 or Chapter 13 bankruptcy has been discharged, you will be required to wait for at least two years before you’re able to take out a mortgage. During this time, it is a good idea to sit down with a credit professional and get an assessment. Individuals and families with a bankruptcy on their credit file are going to go through a bit of extra scrutiny when taking out future loans. So spend a bit of time working on cleaning up your credit.

Step 2: Figure Out Your Monthly Budget

As you move closer to buying a home, you will want to start living off of a monthly budget. This will help to ensure that you are always prepared for your monthly mortgage payments and aren’t left short of cash when payment time comes. A budget can be as simple as a spreadsheet listing your monthly sources of income and expenses. Alternatively, you can use iPhone or Android apps which help to make budget tracking easier.

Step 3: Get Your Down Payment Saved Up

You will also need to start saving for the down payment that you’ll place on your home. The amount that you will need depends on a variety of factors including the city you’re buying in, the size of the home and much more. If you’re unsure about this, contact us and we’ll share some insight.

Step 4: Maintain Your Spending Discipline Until It’s Buying Time

Finally, it’s worth noting that you will need to be very disciplined in the period between your bankruptcy discharge and your mortgage application. Your credit report has to stay clean so that your mortgage lender does not doubt your ability to pay.

Don’t get discouraged if you have some work ahead of you to get your credit repaired. With a little time and effort, you can put your bankruptcy behind you and move on as a happy homeowner. To learn more about the financing process and to discuss your options, contact our team of mortgage professionals today. We’re here to help.

11
Oct
By First Rate Financial Group
Home Mortgage Tips

3 Reasons to Hit the Accelerator on Your Mortgage Payments – If You Can Afford It

3 Reasons to Hit the Accelerator on Your Mortgage Payments If You Can Afford ItDoes the thought of repaying your mortgage for the next twenty-plus years leave you feeling a little down? Whether you’ve had your mortgage for weeks or years, accelerating your payments is an excellent option that can help get your mortgage fully paid off in a shorter time frame. Let’s explore three great reasons to accelerate your payments so that your mortgage debt is paid down faster.

You’ll Be Debt-Free That Much Faster

It may seem obvious, but it’s worth stating that you’ll be debt-free that much quicker if you accelerate your repayment schedule. Every extra payment you make against your mortgage debt builds the amount of equity you own in your home. So not only are you becoming more debt-free with each payment, but you’re also building your net worth. And while it’s true that you might only shave a year or two off of your 25-year mortgage period, being debt-free faster is still worth the effort.

You’ll Pay Less Interest

With most mortgages, any extra payments that you make will go straight towards your ‘principal’ balance. Getting the principal paid down faster means that you’ll end up paying less in interest than if you hadn’t. If you consider that every year you shave off of a 20-year amortization period is a full year of interest that you won’t have to pay, it adds up. Note that if you have an existing mortgage agreement, you’ll need to check the terms to determine the rules around extra principal payments.

You’ll Have More Financial Freedom

Finally, the faster you get your mortgage paid off, the more financial freedom you’ll have. The equity and credit you’ve built over time will also provide you with some options. You can invest in buying an investment property, or in taking out a line of credit to renovate and upgrade your current home. If the numbers make sense, you can also borrow against your home equity to invest in the financial markets. This will diversify your investment portfolio and expand your net worth.

As you can see, it’s well worth the financial investment to accelerate your mortgage repayment. If you can afford it and it won’t significantly lower your quality of life. If you have questions about a mortgage new or existing, contact our team of mortgage professionals. We’re happy to help.

06
Oct
By First Rate Financial Group
Mortgage

What Are Conditional Approvals?

What Are Conditional Approvals?As you take a look at potential houses for sale, what does it mean if you see a house with a conditional approval? Does that mean you can swoop in and purchase the house with a better offer? Even though a conditional approval doesn’t mean that the sale is guaranteed to go through, it does mean that an agreement is in place.

An Overview Of A Conditional Approval

A conditional approval is an informal acknowledgement that an agreement is in place between a buyer and the lender; however, the lender typically has to collect additional financial information to show that the house is a solid buy. If this process falls through, the house may go back on the market. 

For example, the lender might require an appraisal before financing the house. If the appraisal comes in too low, then the buyer might have to bring additional cash to the table. Otherwise, the lender might refuse to finance the house, meaning that it will go back on the market. Or, the lender might require the buyer to submit additional financial information to show they can afford the home. If they cannot do so, the financing process might fall through.

Is A Conditional Approval The Same As A Pre-Approval?

Even though the terms are similar, they are not the same. A conditional approval is not the same as a pre-approval. The pre-approval process takes place very early in the mortgage application process. The pre-approval process is important because it gives the seller some confidence that the buyer can afford the house; however, a conditional approval process is more formal and takes place much further along in the application process.

What Is Required For A Lender’s Conditional Approval?

The conditional approval is only granted after the applicant has submitted an offer on a property. Some of the documents that the buyer might have to submit include financial statements, income statements, tax returns, explanations of negative credit report items, and evidence of any debt or liabilities.

Once all this information is collected, the lender will decide whether to grant the buyer conditional approval. This could help the buyer lock in his or her agreement before proceeding with the other steps in the mortgage application process.