Low Rate Mortgages - Mobile Alabama, Low Rate Home Loans, Mobile Alabama

It's never fun to be turned down for a loan, but before you think you won't be able to get credit anywhere, there are some steps you can take.

Lenders are required by a federal law, The Equal Credit Opportunity Act, to tell you in writing when you've been turned down for credit. Two important pieces of information must be included in the letter you receive when you are denied credit:

• The specific reasons why you were denied credit (or information on how to obtain those reasons); and
• If a credit report was used in making that decision, the name and address of the credit reporting agency that supplied it.

If you don't understand the reasons given for turning down your application, ask for more information. Sometimes it can be hard to determine exactly why your application was not approved, because these decisions involve a lot of different factors. Don't be shy about asking, though, since the information you receive may help you improve your credit so you can qualify in the future.

You may be denied credit for various reasons, If your loan application was rejected because of insufficient income to afford the house you want or you have insufficient funds for closing costs and a down payment, you could consider loan programs for low- to moderate-income borrowers with lower down payment requirements, such as an FHA loan or VA loan.

If you requested the loan amount which is larger than the appraised property value, the loan will be denied. In this situation:

• You can try re-negotiate with the seller for the purchase price to lower the loan amount
• Make an additional down payment to cover the difference between the appraised value and purchase price
• If you think the appraiser undervalued the property suggest that the lender re-examine the appraisal

If your loan is turned down because of a poor credit report, you are entitled to a free copy of that report. You must request it within 60 days, so don't wait to order it. Read your report carefully to make sure it is accurate and complete.

Once you have a copy of your credit report, you should check for errors and fix any errors by disputing them with the credit report agency. If you believe that mistakes on your report led to the rejection of your application, you can ask the credit bureau to send a corrected copy to the lender. Follow up with the lender to find out if your application can be reevaluated.

Finally, you can try again. All lenders have different approval standards. Just because you didn?t get a loan from one financial institution doesn't mean you can't get one somewhere else. Try again with another company. Just don't apply for more than four or five loans in a six-month period.

Sometimes the message is not clear... like the ad above. Is this ad for pro drinking or anti drinking.

Changing jobs while thinking about buying house you can get a lot of mixed messages.

For most people, changing employers will not really affect your ability to qualify for a mortgage loan, especially if you are going to be earning more money. However, for some homebuyers, the effects of changing jobs can be a problem when attempting to qualify for a mortgage.

Salaried Employees
Switching employers should not create a problem if you are a salaried employee who does not earn additional income from commissions, bonuses, or over-time. The switch has less impact if you remain in the same line of work. You will hopefully be earning a higher salary, which will help you better qualify for a mortgage.

Hourly Employees
If your income is based on hourly wages and you work a straight 40 hours a week without over-time, changing jobs should not create any problems.

Commissioned Employees
Because of the way that mortgage lenders calculate your income, you should not change jobs before buying a home if a substantial portion of your income is derived from commissions.

Mortgage lenders average your commissions over the last two years. Changing employers creates an uncertainty about your future earnings from commissions; there is no track record from which to produce an average. Even if you are selling the same type of product with essentially the same commission structure, the underwriter cannot be certain that past earnings will accurately reflect future earnings.

In this situation, changing jobs would negatively impact your ability to buy a home.

Bonuses
If a substantial portion of your income on the new job will come from bonuses, you may want to consider delaying an employment change. Mortgage lenders rarely will consider future bonuses as income unless you have been on the same job for two years and have a track record of receiving those bonuses. In calculating your income, mortgage lenders will average your bonuses over the last two years.

Changing employers means that you do not have the two-year track record necessary to count bonuses as income.

Part-Time Employees
You should not change jobs if you earn an hourly income but rarely work forty hours a week. Because there would be no way to tell how many hours you will work each week on the new job, there would be no way to accurately calculate your income. If you remain on the old job, the lender must average your earnings from part-time income over the last two years. You must have a 2-year work history of part-time income to count as income for a mortgage.

Over-Time
Your overtime income cannot be determined if you change jobs since all employers award overtime hours differently. If you stay on your present job, your lender will give you credit for overtime income. The mortgage lender will determine your total overtime earnings over the last two years to calculate a monthly average.

Self-Employment
Delay any change to self-employment before buying a new home. Buy the home first.

Lenders like to see a two-year track record of self-employment income when approving a loan. Plus, self-employed individuals tend to include a lot of expenses on the Schedule C of their tax returns, especially in the early years of self-employment. While this minimizes your tax obligation to the IRS, it also minimizes your income to qualify for a home loan.

If you have a score of 680 or above, you may be considered an A+ borrower. Your loan will involve basic underwriting, probably through a computerized automated underwriting system and could be completed within minutes. If you are in this category, you have a good chance of obtaining a low interest rate and closing your loan quickly.

If you have a score below 680 but above 620, an underwriter will probably take a closer look at your file to determine potential risks. If you are in this category, you may find the process and underwriting time no different than in the past. Supplemental credit documentation and letters of explanation may be required before an underwriting decision is made. You may still be able to obtain "A" pricing, but loan closing may take longer than if you had a higher score.

If you have a score below 620, you may not be eligible for the best loan rates and terms offered. Mortgage professionals may divert you to alternate funding sources other than Fannie Mae or Freddie Mac. You may find loan terms and conditions less attractive than "A" loans, and it may take some time before a suitable funding source is located.

If you do have negative information on your credit report, such as late payments, bankruptcy, or too many inquiries, your best strategy may be to pay your bills and wait. Time is often your best ally in improving credit.

The length of time to rebuild your score depends on the reason behind your low score. Most decreases in scores are due to the addition of a new element to your credit report such as a delinquency or an inquiry. These new elements will continue to affect your score until they reach a certain age. Delinquencies remain on your credit report for seven years. Most public record items remain on your credit report for seven years, although some bankruptcies may remain for 10 years and unpaid tax liens remain for 15 years. Inquiries remain on your report for two years.

While many lenders use these scores to help them make lending decisions, each lender has its own strategy, including the level of risk it will accept for a certain loan product. There is no single "cutoff score" used by all lenders and there are many other factors used to determine your eligibility and interest rate.

Keep copies of all earnest money checks and proof that the checks have cleared your bank. Provide this documentation to your lender so that you get proper credit on your closing documents.

Notify your mortgage company of the final sales price at least five days prior to your closing. If your sales price changes from the original contract, the lender will need copies of all addendums and change orders for the upgrades. The final closing documents cannot be prepared until both builder and buyer agree to the final sales price.

A final inspection is required on all new construction before the loan is closed. The appraiser must inspect the property to ensure that it was completed to the original plans and specifications. The mortgage company schedules this inspection. The home must be COMPLETE and READY TO MOVE-IN before the appraiser can perform the final inspection. The charge for the final inspection is $100 which will be included in your closing costs. If the home is not complete when the appraiser goes out, he will have to inspect it again which will be an additional $100 charge. Please consult with your lender as to the best date for the final inspection.

Your home must be completed before closing. This includes landscaping, pool, fence, etc. If you would like to arrange to escrow for these improvements and close before they are complete, notify us at the time of locking in your rate. Only a few investors will allow for escrow holdbacks.

Bring a cashier's check made out to the title company for your closing costs.

Tell your lender if your salary or other compensation has changed from what has been noted on your loan application.

Inform your lender if your address changes from what appears on your original loan application. They must complete rental and mortgage verification for all of your residences within the last two years.

Obtain homeowner's insurance with minimum coverage equal to the amount of your total loan or the replacement value of the house. Call your lender with your agent's name and phone number at least 10 days before closing.

Keep documentation (or a "paper trail") on any large deposits into your account. A "paper trail" should include copies of all paperwork necessary to prove a financial transaction: copies of all checks, deposit slips, loan paperwork, forms to liquidate assets, etc.

Notify your lender if you move funds from one account to another and provide a "paper trail" on any transactions.

Do not acquire any additional debt or make any large purchases on existing credit without first consulting your lender. For example: purchasing a car or buying appliances for your new home will change your debt to income ratios.

Do not change jobs without consulting your lender. A change in compensation may affect your ability to qualify. Buyers must have a two-year history of bonuses and/or commissions to be counted as income. Lenders may verify employment on the day of closing as a quality control check.

Do not co-sign with anyone to obtain a line of credit or make a purchase. The payment will show up on your credit report as an additional debt.

Do not negotiate your contract with an allowance and expect to get money back at closing. An allowance can be used only to pay closing costs or reduce the sales price.

Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction - a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Tax Credit Versus Tax Deduction

It's important to remember that the $8,000 tax credit is just that... a tax credit. The benefit of a tax credit is that it's a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit... and still receive a check for the remaining $4,000!

Phaseout Examples

According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

To break down what this phaseout means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer's income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.

Homes that Qualify

The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.

Higher Loan Amounts

More good news - there is an extension on the additional tier of conforming loan amounts which had been first established in 2008. This tier of home loans are those greater than $417,000, and with a maximum that depends on the area, but is not greater than $729,750. These loans will again be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard "jumbo" loan rates.

Additional Housing-Related Provisions

Tax Incentives to Spur Energy Savings and Green Jobs - This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings - This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing-This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance-This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama's plan to help struggling borrowers before they are faced with a default on their mortgage.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That's because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.