Monday, August 28, 2006

Poor Credit Home Mortgage Loans - The Role of the FICO Score

If you have bad credit history and are looking to get a home mortgage loan, then chances are you are going to need to know all about how the FICO credit scoring system works.

FICO – Fair ISAAC & Company – is the leading credit reporting agency that lenders turn to when it comes time to credit scoring your home loan mortgage application; so if you do have bad credit history, these guys will know.

The formula used by FICO cannot be disclosed because of a decision made by U.S. Congress. There are some things generally known about FICO which that could help you understand why and how you can get approved:

1. The higher your FICO score, the better chance you have of getting that home mortgage loan. Also, the higher your score, the more room you have to negotiate a lower interest rate.
2. If you have a FICO score lower than 500, there is very little chance you’ll be getting a mortgage home loan.

That said, if you have a score of:
500 – 600 you should be able to get a home mortgage loan, provided you are willing to make a down payment.

600 – 640 You should get a 100% home loan financing. Thats right, with no money down.
640 - 700 You should be able to be approved for a 125% home mortgage loan. 700+ You’re in the drivers seat! You should be able to get an excellent rate with excellent terms.

3. FICO depends on each credit report, so before you apply for a home mortgage loan, if you have bad credit history, get a copy of your credit report and make sure there is nothing on there that shouldn’t be there. If there is, get it changed before you apply for the home mortgage loan.
4. Wait until after you have purchased or refinanced your home before you buy anything
additional on credit. More loans or higher balances can have a dramatic effect on your mortgage approval, regardless of whether or not you had over a 600 FICO score before you bought on credit.

5. Remember, the FICO score is only a part of your home mortgage loan application, so if at first you don’t succeed in getting your home loan mortgage, don’t give up. Some lenders may still be willing to lend to you!

People with bad credit often don't understand how the credit scoring system works. It is beneficial to find out more about it when looking to get a home loan with less than perfect credit to bad credit or when dealing with sub prime mortgage lenders.

To view our list of recommended bad credit mortgage lenders online, visit this page: Recommended Bad Credit Mortgage Lenders

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans. The site has many informative articles and the latest finance news.

Sunday, August 27, 2006

Mortgages: Turn Your Pennies Into Pounds!

House prices continue to rise. “First time buyers continue to struggle to get a hold on the property market.” The headlines in the newspapers must make depressing reading for would-be first time house purchasers.

Ten years ago around £4,000 would have been considered a reasonable deposit on a house. This figure has reportedly risen to around £12,000. No wonder the average age for a first time buyer has gone from 30 to 34 years old.

There is nothing for it but to get down and save. Forget the “I’m spending nothing this week; I’ll do with out a holiday/work through my holiday, even.” This is unrealistic, you won’t keep it up. It would be much better to start to save in a realistic manner, making cuts in spending wherever possible.

One of the first tasks to sort out is exactly how much you can commit yourself to in the way of a mortgage. This will give you your figure for the deposit and you’ll be able to work out the monthly mortgage repayments. The internet is the best place to look to compare mortgage details and give you an idea of what you’re aiming for.

If you keep a record of your spending you should be able to sort out just what you’re spending your money on, and maybe there could be some things you could cut back on. Just by writing things down you could become more conscious of where your money is going and it will probably help you to spend a little less.

Are there any small amounts of money about? Maybe a small savings account you’d forgotten about, or even your old money-box. Gather these together and add any spare money, it’s surprising how the cash can mount up.

What about a typical day at work. Do you grab a coffee on the way? This can mount up to around £15 a week, £60 a month and £720 a year! If you’ve a long journey and you really can’t survive without a coffee, then it only takes a few minutes to make a flask up. It’s quite a saving. Buying lunch out is expensive and during a busy day at work, it’s easy to get distracted and end up choosing something more expensive than you intended. Pre-packed sandwiches are usually quite expensive but a worthwhile saving can be made by making and bringing in your own.
There are quite probably some monthly debits you’re paying for. The magazines you don’t really read any more. The club memberships you really don’t need and can’t justify. Cancel them.

Assuming you’re responsible for at least a share of utility bills, make all the economies you can. Turn off some of those unnecessary lights, unplugging appliances and save water by turning taps on for a minimum of time. It’s more economical to shower than to bathe. Turning down the heating a notch or two may be possible. There are sometimes discounts for paying accounts in full when you get a bill, rather than paying extra to pay in instalments, for your car insurance or suchlike. Maybe this would be a good time to check that you’re not paying too much for car or contents insurance? Check the internet for comparisons.

If you have credit card debts, could you save money by moving your balance to a zero interest card, which would mean you were paying money to reduce y
our actual balance, rather than paying interest?
Choose a home for your savings. Consider a tax-free ISA or a high interest savings account. You’ll get more interest by leaving the money in place for longer so choose one that requires, say, three months notice, to encourage your savings to mount up.

Become a penny-pincher. It’s the only way to get on that ladder!
Read the great articles avaiable on mortgages from Mortgage Machine.