Low Interest Mortgage Rate Essay

     What is happening is that there are some unethical lending practices that are threatening the housing industry as a whole. The concern involves the practices of some sub-prime lenders. These practices are considered to be “predatory” on consumers. Sub-prime lenders offer home loans (Equity Loans & 1st Time Home Purchase Loans) to moderate to lower income families. These clients are considered to be high credit risk borrowers, also know as B-C-D credit clients. Interest rates and other loan terms generally cost more than those paid by clients served by prime lenders with better credit records (A credit clients). Sub-prime borrowers end up paying more simply because the risk of loan repayment is fundamentally higher than that of a prime market borrower.

Prior to the 2008 economic depression, obtaining a mortgage was relatively simple for home buyers. However, many of those mortgages had provisions that made it difficult for borrowers to repay their mortgages (“Dodd-Frank,” n.d.). As a result, many homeowners lost their homes when they were unable to repay their mortgages, which led to the real estate crisis. In 2010 the Mortgage Reform and Anti-Predatory Lending Act, also known as the Dodd-Frank Act, was enacted to reform how mortgage servicers vetted borrowers and to eliminate the use of predatory loan practices (Cheeseman, 2013, p. 485). Under the Dodd-Frank Act, creditors must establish borrower’s credit history, income and expected income, debt-to-income ratio, and other factors before

Banks, along with other lenders nationwide, have made things tougher for folks who want to buy a house. The requirements for conventional mortgage loans today make it extremely difficult for someone who doesn't have stellar credit to find a loan. FHA home loans are there for people with lower credit scores, yet the guidelines for such loans are a lot stricter than the VA home loan standards.

The US financial crisis has brought with it untold hardships for homeowners. Many borrowers are in a state of default, in bankruptcy or in foreclosure. This has necessitated bringing about various mortgage modification options to bail out those who are unemployed and looking for work. These options are in general called mortgage reduction programs.

Payment shock, where a new payment is significantly higher than an old payment, is a factor that is taken into consideration during the mortgage eligibility process. Mortgage lenders are wary of payment shock, as they don’t want potential borrowers to experience a drastic change in their payment schedules; such a shock could make it difficult for people to pay back loans in a timely manner. The types of loans available for potential homebuyers have also changed in time. An example of a type of mortgage is an Adjustable Rate Mortgage (ARM), a mortgage that has an adjustable rate of interest over a period of time, which is not as widely used after the collapse. Before the collapse, as long as a person qualified for the minimum rate of interest of the ARM they were eligible to be granted the mortgage. The benefit of ARMs is that potential borrowers must now be able to qualify for the fully indexed rate, the maximum amount in which the interest rate can increase during the course of the loan, prior to being eligible for the mortgage. Interest-only and No Document mortgages are examples of loans that are rarely used today. Interest-only mortgages, a mortgage where a borrower is qualified on a payment, which does not include any principle reduction to the mortgage loan on a monthly basis. No Document mortgage, commonly referred to as No-Doc or Low-Doc

Later in life, I went through starting businesses, renting offices and places to live, and at every step I did admire ho important credit history is in the US for both a person and a business. With a current degree of automation and standardization, it was clear to me that often people will not even consider talking to you if your credit is limited or far from excellent.

Some factors that influence a person’s credit rating or their ability to get credit is if you pay your bills on time and don’t spend all your money on your card you should have decent credit. If you always have late fees and can’t pay your bills, you will have bad credit.

It is always wise for anyone looking to obtain a loan for the sake of purchasing a home to develop a lucid perspicacity of the application process. When a person understands the process, they are less likely to become overwhelmed or intimidated by anything that occurs during the process. A person’s credit score will play a significant role in determining whether they are approved for a mortgage loan as well as determining the interest rate of the loan.

Your rating is important even for this kind of loan because it tells businesses like car dealerships how risky it will be to lend you money. People with good Fair Isaac Corporation (FICO) scores find it easy to get loans because

1. Month to month Mortgage Installment That they Can Bear: Before prescribing a particular home loan to my candidates, it is my obligation to ensure that the borrower can manage the cost of the proposed mortgage and that they can archive their business and pay that will be required for the mortgage arrangement. Today's best sample of an esteemed home loan arrangement is the 30-Year Settled FHA Mortgage that can be financed and renegotiated up to

In the economic environment of today, although you may not need to use it, having good credit is vital to survival. It positions you as a fiscally responsible person and can help ensure that:

Even those with good paying jobs and credit scores still find it difficult to get a mortgage. Government-backed Fannie Mae and Freddie Mac are still serving as the anchor of mortgage finance in this country. Most loans are guaranteed by the housing giants, and lenders are scared of selling anything but the most flawless loans to them out of fear that the agencies will force lenders to buy back the loans if they fail. At the same time, heightened regulatory scrutiny has forced mortgage originators to spend far more time on each mortgage they underwrite, to the point that the average lender is processing one-sixth of the mortgages per month they were doing back in 2001.

Another area that lenders will look at is your credit report and your history to see how consistent you are with bill payments. This will help to determine your interest rate. Ideally, your credit report from the 3 bureaus should come out about 740, but if it 's higher, that 's even better.

A credit score is made up by three different credit reporting bureaus (Equifax, TransUnion, and Experian) and is a large factor when it comes to lenders making decisions about loans such as granting a mortgages, car loans, and even personal lines of credit (Hill, 2011).This score can help a lender determine what type of loan one is eligible for, the amount of the loan, and even the interest rate at which they will require the borrower to repay the loan at. Though 81% of Americans know that there are three credit bureaus that assign their credit score, only 30% of Americans know the names of

information found in the files of the credit bureaus. The gathered records are then used by lenders to determine an individual 's credit worthiness—that is—determining an individual 's ability and track record of repaying a debt. Lenders will extend credit to individuals who have paid consumer debt obligations regularly and on time, while those