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November 9th, 2008

Conventional Mortgage Loans – Which is right for you when looking at Lincoln Park homes for sale?

If you’re looking at Lincoln Park homes for sale, it makes sense that you might also be looking at mortgage loans.  There are several types of loans, but they all fall into two categories: government loans and conventional loans.

Government insured loans are FHA, VA or RHS (Rural Housing) loans and have specific criteria to be eligible.

Any loan that doesn’t fall under FHA, VA or RHS are conventional loans; conventional loans can be conforming or non-conforming.

  • Conforming Loans follow guidelines set out by Fannie Mae and Freddie Mac, which establish suitable properties, maximum loan amounts, borrower credit and income requirements and down payments.
  • Jumbo Loans are above the maximum loan amount established by the guidelines, and are non-conforming loans.  They’re bought and sold on a small scale, and often have higher interest rates than conforming loans.
  • B/C Loans don’t meet the borrower credit requirements set out by the guidelines.  This type of loan is offered to borrowers that filed for bankruptcy, foreclosure, or have late payments on their credit reports.  What interest rates and programs you qualify for depend on your financial situation and credit history at the time you apply for a mortgage.
  • Fixed Rate Mortgages (FRMs) have fixed interest rates and monthly mortgage payment for the period of the loan.  In general, you can get a lower interest rate for a shorter loan term.  FRMs are available for 10, 15, 20, 25, 30 and 40 years, though 15 and 30-year loans are the most popular.
  • Balloon Loans are short-term FRMs, usually based on a 30-year schedule, with a lump sum payment at the end of a 3, 5 or 7-year term.
  • Adjustable Rate Mortgages (ARMs) have fluctuating interest rates and monthly payments.  The lender makes periodic adjustments to the interest rate, based on changes in a defined index that is established at the time of your application.

When looking at the different types of mortgage loans, remember that it’s important to choose the right mortgage for your situation.

Find thousands of Lincoln Park homes for sale and shop from the comfort of your own home on my website at LincolnParkLiving.com.  Or, let me do the searching for you.  Just give me a call (312.953.8685) or shoot me an email (Doug@LincolnParkLiving.com) and I’ll set up a home search for you, which you can modify or add searches as you wish.

November 3rd, 2008

Reasons Mortgage Lenders Decline Loans for Lincoln Park Homes

Being declined for a mortgage is frustrating, especially after you’ve found your ideal home. If this has happened to you, you’re not alone. Lenders deny mortgage applications every day for any number of reasons. Here are some reasons lenders may decline loans for Lincoln Park homes.

  • 1. Limited credit history. Lenders are taking a risk when they loan you money for a home. For this reason, they determine your risk by reviewing how you have managed credit in the past. If you have no credit history, the lender won’t be able to tell if you will repay your loan or not. If you are moving from out of the country, it’s critical that you talk with your lender to verify that you have a U.S. credit history and that the currency you are compensated in will qualify you for the type of loan you are looking for.
  • 2. Poor credit history. If you have defaulted on loans or overextended yourself in the past, lenders may be afraid you will do the same thing to them. The lenders don’t know you personally, so they look at your past credit behavior to see how likely you are to pay them back. In today’s crazy lending world, your credit score plays an even more critical role in getting a loan. In fact, many lenders have varying rates for different credit scores, the higher your score, the lower your rate. If that isn’t proper motivation to have a high credit score, I don’t know what is!
  • 3. Too much credit. As strange as it sounds, lenders sometimes turn down loans for Lincoln Park homes because the borrowers have too much credit available to them. If you have several credit cards with high limits, lenders may be afraid you’ll use all this available credit and then be unable to pay your mortgage payment.
  • 4. Inconsistent housing. Lenders look for stability because it makes you look more responsible. If you move frequently, whether it’s across town or across the country, you can appear unreliable. This makes you a credit risk to lenders.
  • 5. Insufficient income. Lenders want to make sure you’ll be able to make your monthly payments. If you are self-employed, have changed jobs frequently, or rely on commissions as a substantial portion of your income, lenders may view this as an unstable income. They may think you won’t make enough money each month to pay your payment.

Don’t waste your time or gas driving around looking for Lincoln Park homes for sale. I can help you. Search thousands of homes for sale from the comfort of your own home at LincolnParkLiving.com. Call 312.953.8685 or email me at Doug@LincolnParkLiving.com, and I’ll set up the searches for you.

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