Home Equity Loans – second mortgage

Robbie T. James asked:




Home loans are absolutely necessary if you want to buy a home of your own. Only a tiny percentage of the home-buying public buy their house using cash – and that is usually when they are downsizing from a large home to a smaller one. The percentage who buy with 100% cash is even smaller among first-time home buyers.

When you are out to buy a home, it is useful to learn the ropes in terms of what you need to prepare and how to search for the right home mortgage deal. It is especially important to learn how to shop for a home if you have a bad credit score.

If you are looking for home loans, and bad-credit-OK home loans in particular, here are 5 steps to finding the best deal:

1. Finding a deal on a home loan means knowing how and where to look:

The biggest mistake that would-be home buyers make when looking for a deal on a home is to just start calling around to average home mortgage lenders. If you follow this method, you are basically putty in their hands. And, you probably will not end up with the best-possible deal.

2. Start by getting a realistic sense of your credit score:

Start the application process by pulling your credit report with the three major credit bureaus. Make sure you take note of not only your scores, but also any reporting errors that show up on any of the reports. Be sure to get those removed right away, as doing so will have a positive effect on your credit score.

3. If you have a bad credit score, look for a special kind of home loan lender:

Over 95% of lenders specialize in working with people with average, good or excellent credit. If you have a bad credit score, you will benefit greatly from applying solely with bad-credit-OK lenders. They specialize in finding ways to determine your creditworthiness even when your credit score itself is low.

4. Research lenders’ websites and online discussion boards:

Now, put together a list of multiple bad credit home mortgage lenders. Then, do your research by examining their websites. Also, have a look at discussion boards and chat rooms and do searches for their names. Find out if anything good or bad has been said about them recently.

5. Spend the time to get pre-approval with 3-5 home loan lenders:

Finally, create a shortlist of at least 3 lenders and start applying. Be sure to take the time to apply to all of the ones on your candidate list.

Take these 5 steps to finding home loans and bad-credit-OK home loans.

Henry

Alan Lim asked:




Determining your score

To improve the credit score so that you have the best possible terms on a home equity loan, the first step is to learn all you can about the items recorded on your credit reports. There are three major credit bureaus and each of them may have different information. Some or all of the credit bureau reports can contain errors that should be corrected. There are precise procedures that must be followed in order to clear inaccurate, duplicated or missing information. It is possible to complete the cleanup process yourself, or there are companies that specialize in clearing up the information.

What role do credit bureaus play?

Credit bureaus collect information about individuals and present it in a consistent form to lenders, promotional businesses and landlords among others, in order to demonstrate the creditworthiness of the individual. When an individual applies to a lender for a home equity loan, the credit report of the potential borrower will be requested from one or more of the credit bureaus. Usually, the report is presented in the form of a FICO score. This score is a numerical value that tells the lender how the borrower ranks according to the bureau’s algorithm.

Improving the score

Before applying for a home equity loan, you should review your credit score and take steps to improve the score. First, call for a current credit report from each of the three major credit bureaus. Each is required to provide a free report each year upon request. Then carefully review each item and make certain that you understand what the terms and markings indicate. Take note of each incorrect item and follow the instructions provided by the credit bureau to dispute the incorrect information. You should document each step of the process and don’t give up until the report is as accurate as it should be.

Removing negative entries

Current legislation provides a number of different ways that consumers can force the credit bureaus to remove inaccurate information. You can also stop the sale of your credit bureau information to companies who purchase such information either to try to collect on old and sometimes nonexistent debts. Negative entries will lessen the chances of good terms for the home equity loan for which you apply. For example, too many inquiries will lower your credit score. A history of frequent moves can hurt your chances. You can lose good terms on a loan because you’ve held too many jobs recently.

Fixes to avoid

Adjusting the credit score can be fairly simple to do, so it is not necessary to pay someone else to correct your credit score. In fact, some less than scrupulous businesses take your money, but don’t do much toward correcting errors. Don’t waste your money on one of these. You should also avoid blanket disputes online or by mail. The credit bureau will often consider such efforts frivolous and refuse to investigate the dispute further. The time you spend in correcting legitimate errors will pay off in reduced terms for your home equity loan.

Leo