Credit Score Requirements for VA Loans

Credit Score Flashed on Laptop ScreenWhen applying for a conventional loan, you are likely to score better rates with a high or excellent credit score. This is why you might want to fix or improve your rating first before obtaining a mortgage. When it comes to VA loans, however, there is no minimum required credit score to qualify for one.

This is one of the many benefits of this mortgage, including no-down payment financing and low closing costs. The main reason for this is that the US Department of Veterans Affairs insures all VA mortgages.

If you qualify for this loan, do take note that many private lenders who offer VA loans might still have their own credit score requirement. According to PRMI Hendersonville, most require a score of 620 or higher, but there are still those who accept applicants with lower scores.

Risks on Lenders

VA loan companies in Hendersonville note that a poor score might not necessarily prevent you from obtaining a loan, but a higher score may allow you to score better rates and terms.

While loans are backed by the VA, the department itself doesn’t actually issue the loans. Private lenders and lending companies do, which means they take some risks by allowing an applicant to borrow the money.

Better Score, Better Terms

Just like in conventional loans, lenders are generally more comfortable in giving the best rates and terms to those with excellent credit. Most lenders prefer borrowers with a high a credit score as this demonstrates better financial discipline.

This means that you’ve been on point in meeting your financial obligations, including car loans, credit cards, and other forms of debt.

A Host of Other Benefits

The main benefit of VA, however, is that that the required credit score is much lower. There are also a host of other benefits such as lower average rates, no prepayment penalties, no down payment and no private mortgage insurance (PMI).

But then again, you might want to make yourself an attractive buyer with a high credit score to quality for better rates and terms.

While lenders look into your credit when screening applicants for a VA loan, it isn’t the only requirement. They also consider your current income, duty status, length of service and character of service. If you think you qualify for this loan, it is best to talk to a reputable VA lender.

Title, Payday, and Personal: Loan Basics for First-Time Borrowers

Woman asking advice about loan

Woman asking advice about loanLoans, regardless of loan type, have at least one thing in common: the borrower needs money ASAP.

Most American adults live from paycheck to paycheck. As a result, in times of high need for cash, they have no choice but to turn to cash lending institutions. Depending on their need, as well as the capacity to repay their cash loans, Americans can choose from different types of loans.

Car Title Loans

Utah Money Center, a title loans service company in Utah, says a title loan is a more affordable option in comparison with other quick loans.

In auto title loans, the lenders only require the title, not the vehicle itself. Meaning, you can still drive your car while you are repaying your debt. The payment is usually due within 30 days or a few months, depending on the amount borrowed.

Generally, a borrower is required to fill an application form and submit the title and photos of the car, and their photo ID. In some cases, they may need to hand over extra keys or purchase a roadside service plan.

Payday Loans

Payday loans usually have high-interest rates and are provided by small-time credit merchants. Nowadays, some lenders allow for online application.

The lenders base the loan interest rate on the borrower’s income and credit profile. Payment is taken from the borrower’s next paycheck, pension, or Social Security.

Borrowers are charged up to 400 percent in annual percentage rate (APR), although most states implement limitations on interest charges. The typical payday loan limit is $500.

Personal Loans

Personal loans or signature loans are repaid within 12 to 60 months. Lenders require bank statements, pay stubs, and credit profile reports. In some cases, borrowers need to present tax returns and W-2 forms.

These loans, provided by banks, credit unions, or online lenders, are unsecured as they do not require collateral. As a result, the interest rates are higher than auto or house loans, ranging from seven to 36 percent APR.

Borrowers should determine which type of loan is best for them. For example, borrowers who really need quick cash can go for a title loan. Those who want to settle their loan in a single payment can go for a payday loan. However, they should be responsible when it comes tot repaying their debt because loan defaults and delinquencies have consequences.

Need Cash Fast? Here’s What You Can Do About It

Handing out money to a womanIn these trying times, you can suddenly find yourself bereft of your emergency funds yet in need of cash. Life can hit the hardest when you’re down, and you’ll need funds in case of any emergency. So what’s the next step?

Borrowing from Your Inner Circle

It can be difficult or uncomfortable to ask, but the first ones you can approach for help are your family and close friends. These loans are generally easier to bear though they will not necessarily be interest-free. To reduce the chance of conflicts caused by such loans, make sure you have everything down on paper and that all terms are agreed upon by both parties. These loans might not cost much in interest, but they can cost you valuable relationships.

Taking an Unsecured Loan

The interest rate can be quite high, but if you have a credit card with a cash advance option, you can avail of that to tide you over in your time of need. If you’re lucky, some credit cards can give discounts on the interest or even offer a 0% interest option on your loan. The advantage of this is the debt is unsecured—this means no personal assets are on the line for you to take the loan. There is, however, an upper limit to the amount you can borrow and it will depend on your capacity to pay.

Using a Secured Loan

If you find yourself still in need of funds but have reached the limit on the previous options, it may be time to consider putting up your assets as collateral.

If you have adequate equity on your home, then a home equity loan is one option. Alternatively, if you have a car, another viable option is to get a title loan. Why consider the latter? The difference between these two is that title loans have a higher interest rate, but they are also faster to process. Research local lenders so you can be sure to get the best home equity or title loans in Provo.

Pay Off Your Mortgage Earlier Than Expected in 4 Easy Steps

Mortgage loan documentsApplying for a loan in mortgage companies in Fort Myers is the best way to get your own home. However, a mortgage is a huge financial commitment that you’ll have to pay off for years.

But what if there’s a way to shorten your loan? This may sound impossible at first, but you can pay off your mortgage in less than ten years if you follow these tips.

1. Get a house that you can afford.

Choosing the right house can be a challenge, especially when there are so many options available. You can make it easier if you look at houses that are within your budget. So, examine your monthly earnings to help you determine how much you can spend on a house.

2. Consider paying bi-weekly.

You could consider paying half payments every two weeks instead of making just one monthly payment. It may seem the same, but since there are 52 weeks in a year, paying it bi-weekly will ensure that you’ll be making 13 full monthly payments each year.

3. Make extra payments.

Most mortgage companies will allow you to make an extra payment and put it towards your principal balance. Doing so can help you pay a bit of the principal much earlier than expected. This will save you in interest charges in the long run.

4. Be frugal.

It’s not bad to be frugal at times, especially when you want to finish your loans much faster. So, try to be frugal and think of ways on how to reduce your bills.

You could cut off your cable service, for instance, if you already have a stable internet connection. There are several streaming sites that you can choose from, which is a much more affordable option than a cable service.

Paying your mortgage much faster is the best way to free yourself from financial commitment. You might want to talk to a financial adviser or think of ways on how to save your money and put it on to your existing loan.

3 Mistakes You’re Likely to Make When Taking a Mortgage

Rejected mortgage applicationHomeownership is a dream come true for everyone. It might, however, be a steep venture without the money to buy or build your house. A mortgage is the best solution to achieve your homeownership dream regardless of your income. Exercising caution, however, is essential to get the perfect Texas mortgage for your situation and to avoid some of the common mistakes borrowers make. A mortgage is, after all, a long-term commitment. Ensuring it fits various patterns and circumstances in your life is vital.

Here are some tips to help you avoid some common mortgage mistakes:

Being House Poor

This is among the most prevalent mortgage mistakes. Being house poor is a consequence of committing a significant amount of your monthly income to mortgage repayment, leaving you with little to no funds to sustain yourself. To avoid making this mistake, allocate not more than 30% of your pretax income to mortgage repayment.

Ignoring the Real Price of Homeownership

Varied costs come with homeownership. Without proper preparation, they might surprise you along the way and leave you disappointed. Property taxes and maintenance and utility costs are some of the expenses that come with owning a house. Ensure you factor these before picking your mortgage, so your costs and monthly mortgage payments fit your budget perfectly.

Ignoring APR

Most mortgage borrowers only focus on their advertised loan’s monthly interest rates. Some lenders will advertise low rates, but compensate with high loan fees that ultimately increase your yearly repayments. Base your choice on the annual percentage rate (APR) since it includes the lender’s fees and interest, and is the ideal reflection of your mortgage.

It’s possible for you to make a smart choice when taking a mortgage. Avoiding these common mistakes is a big part of a stress-free mortgage, though not the only one. Having a trustworthy mortgage lender is the other crucial part of a hassle-free mortgage.

Q&A: What’s a Debt-to-Income Ratio and Why Does it Matter?

Woman using a laptopOther than your creditworthiness, your debt-to-income (DTI) ratio is another thing you need to worry about when applying for a mortgage. Whether you want to obtain a conforming or a jumbo loan, your prospective lenders would measure your capacity to pay with it. Plus, it can determine the mortgage rates in Salt Lake City you can qualify for.

To further advance your knowledge of DTI ratio, let’s answer the most asked questions about it:

What Is the Max DTI Ratio?

Mortgage lenders have different DTI ratio requirements, but your housing monthly payment shouldn’t exceed 36% of your monthly income. The lower your DTI ratio, the less likely you would miss your payment.

Apart from increasing how much you earn, one way to meet the DTI ratio requirements is to extend the term of your mortgage. Of course, this would mean paying for more interest over time.

What Are Front- and Back-End DTIs?

The front-end DTI ratio refers to the percentage of your gross monthly income you need to allot to cover your housing monthly payment. On other than hand, the back-end DTI ratio takes into account all of your monthly financial obligations.

According to the new Qualified Mortgage rule, the maximum back-end DTI ratio is at 43%. In other words, your monthly liabilities (debt payments) should exceed 43% of your monthly income. Despite the limit, most lenders would want to see your back-end DTI ratio to be below 43%.

How to Calculate Your DTI Ratio?

To figure out your current DTI ratio, get your average annual gross income based on your past two tax returns and divide it by 12. Then, add up your projected housing monthly payment and your other liabilities, and divide the total by your average gross monthly income.

If the number exceeds the maximum back-end DTI ratio allowed, don’t fret. You can lower your DTI ratio by paying your other debts off, pay a larger down payment to borrow far less money, or consider a more affordable property to buy to reduce the size of mortgage you need and decrease your potential housing monthly payment.

Put a premium on your DTI ratio to qualify not just for the kind of mortgage you want, but also for a favorable interest rate. If you can keep it as low as possible before speaking with your prospective lender, you can put yourself in a good position to negotiate a great deal.

How to Get Your Finances Ready for a Loan

Coins and paper bills

Coins and paper billsMost people have taken out loans at one point in their lives. Some may have managed it well until full payment, while some might have gotten into trouble for it. That’s why good planning is key whenever a loan is needed.

Monroe Funding Corporation believes that applying for loans should be hassle-free. And one way to achieve that is by preparing yourself and your finances even before looking at an application. Here are five steps to get you on the road to a worry-free loan.

1. Review your credits.

While some loans don’t have credit checks, most loans will require you to have good credit standing before you can get approved. Besides, whether it’s required or not, good credit scores are always an advantage.

2. Review your current debts.

How’s your debt-to-income ratio? Making sure that you’re capable of taking out another loan is crucial. Review all your monthly debts against your monthly income and take note of the available funds that’ll be left after deduction.

3. Evaluate your expenses.

Are there monthly expenses you can cut down to ease the burden of your loan payments? Let go of monthly subscriptions or downgrade plans to save up more money for payments.

4. Determine an estimate of payments.

Once you’ve done numbers 1 to 3, you can now determine an amount that can be available for payments once your loan is approved. Be sure still leave funds for emergencies.

5. Organize paperwork.

All types of loans will require some kind of paperwork. Read and understand all the requirements for the loan your applying for and make sure everything is prepared and in one place before filling out the application.

Loans can never be completed overnight. You need to be prepared to answer questions, present documents and talk to financers before you get approved. If you follow these steps, you can ensure a worry-free loan process to fund your needs.

A Guide to FHA Loans: What You Need to Know

Couple reading loan paperworkFHA loans are particularly popular among first time home buyers. This is because they have relatively low credit scores pegged at 580+ as well as low down payment requirements of 3.5%. If your credit score is around 500-579, you are required to produce a down payment of at least 10%.

FHA Loans in Missouri were born from the massive default foreclosures that occurred in the 1930s. This loan provides the lender with insurance security, to stimulate the housing market by ensuring that loans are affordable and accessible to people who cannot afford hefty down payments and those with less than perfect credit scores as well. As a borrower, here are FHA loan factors that you should know.

Closing Cost Covered

The FHA permits some builders, lenders or home sellers to pay off some of your closing costs. These costs include; credit report, appraisals, and title expenses. For instance, a home builder may offer to pay for you the closing costs for your home, as an incentive for you to purchase from him or her. However, note that if a lender offers to pay for you the closing costs, they are likely to charge you a higher interest for the same. Therefore, weigh your options and compare quotes before settling with any lender or builder.

Cash for Repair

FHA loans offer a special credit to anyone who requires extra money for home repairs. The primary advantage of this investment also known as 230(K) is the fact that the amount is not dependent on the present appraised value of the home. Instead, it is pegged on the estimated cost after repairs.

Financial Hardship Relief

While FHA insurance is not an easy way out for people who do not want to make their payments, it can offer relief to a person who is struggling to pay due to serious financial difficulties. This assistance may come in the likeness of a modification in the interest rate or repayment period, a temporary forbearance period, or repayment of part of the loan without interest.

FHA loans are among the most comfortable loans in existence. The insurance makes it even more comfortable for the lenders since they are assured of getting back their money even after a borrower defaults.