I have no Credit Scores, can I get a Mortgage?

I have no Credit Scores, can I get a Mortgage? No Credit Scores, believe it or not it's very common. There are lots of people out there that don't have any credit. It is like a double edge sword, no credit could hurt you, but bad credit will definitely hurt you.

Normally people that have no credit scores, fall into two categories:

1. Young and just starting out
2. I pay cash for everything
   

Luckily there is hope for individuals that don't have credit scores and want to buy a home. There is a loan called FHA, which is a life saver for lots of happy homeowners. FHA is the single largest insurer of loans in the world. This particular loan is more lenient with banks, because it is insured by HUD. The qualifying process is less stringent. FHA does not require credit scores to get a mortgage. It offers an alternative in place of no scores. It will allow you to provide alternate lines of credit. Typically the underwriter will require 3 sources.

The following would work:

1. Last 12 month payment history from any utility company
2. Day Care payment history for the last 12 months
3. Letter from car insurance provider
4. Life insurance payment.
   

I have personally helped many families that had no credit scores get a mortgage. Here are some of the benefits of a FHA loan:

1. Low down payment
2. No credit scores required
3. Easy credit qualifying
   

FHA has been helping families since 1934, and its still is doing so. Even with all the changes going on in the mortgage industry, this particular loan is still the strongest provider of home ownership today. So if you don't have any credit scores, the answer is yes, you can get a mortgage. FHA typically requires 3% investment from the buyers, but it will allow you get a 3% gift from a blood relative or Bond money assistance from your local city.

It will also allow the seller to pay 6% of your closing costs, so you can essentially get into a house with little or no money at all. Are you currently in a CH 13 bankruptcy? No
problem, you can get a mortgage as long as you have been in the bankruptcy for a minimum of 12 months. The trustee is required to give written permission for you to purchase a home.

There is no other loan program that has this type of guidelines. You can also get low interest rates with FHA, even though you have no scores, or low scores. I personally
think its one of the best loans to help low income families into a mortgage. Do you have medical collections; well FHA does not require you to pay of medical collections, even
recent ones. So I think you get the idea, it's a great loan for all types of situations.

About the Author: Mike Clover is the owner of www.my720fico.com. My720fico.com is one of the most unique on-line resources for free credit score reports, Internet identity theft software, secure credit cards, and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

How to switch mortgage lenders

Despite all the doom and gloom surrounding the mortgage market, record low interest rates mean homeowners can still save a tidy sum by making sure they are getting the best deal.

The question of whether or not to remortgage once your current deal came to an end used to be simple. Homeowners who stayed on their lenders’ standard variable rate (SVR) for any longer than it took to arrange a new deal were generally viewed as being apathetic at best, if not just plain bonkers.

But times have changed, and one of the peculiar quirks of the credit crunch is that in many cases, lenders’ SVRs are now more competitive than the new mortgage deals on offer.

The high deposits that lenders now demand have further muddied the waters. Two years ago, homeowners needed deposits of just 5% to 10% to qualify for the best deals: today that has soared to 40% (though lower deposit mortgages are starting to creep back into the market, with several competitive deals now available asking for 25% up front).

At the same time, however, falling house prices have eroded the equity stake that people have in their properties, making them less likely to qualify for one of the top deals. For example, if you have a £160,000 mortgage on a property bought last year for £200,000, at the time of buying you owned 20% of the home and the lender owned 80%. However, if the home is today worth £170,000, you now own just under 6% of the property – and are therefore likely to be disqualified from the pick of the mortgage deals.

How to get a good mortgage deal

Rest assured, there are still good rates out there, and, armed with the right facts, homeowners can easily navigate the remortgage maze to decide if they would be better off taking out a new loan. Someone with a £150,000 mortgage, for example, could save nearly £230 a month by switching from one of the least competitive SVRs to one of the current best-buy rates.

Follow Confused.com’s 6 step guide to remortgaging:

Step 1: Find out what rate you are currently paying. This should be fairly easy to establish, either by trawling through your mortgage paperwork or simply by phoning you lender.

Step 2: The next step is to establish whether you will incur early redemption penalties if you change mortgages before your current deal comes to an end. Redemption penalties can be steep, typically at around 2% of the outstanding mortgage, and they could easily wipe out any savings gained by remortgaging.

Step 3: If you decide to go ahead with the process, find out how much your property is worth and how much you’ll need to borrow. Your lender will be able to tell you what your outstanding mortgage is, and they may also be able to give you a property valuation. Alternatively, there are a number of free websites which will do this for you.

Establishing how much you are looking to borrow, as a proportion of your home’s value (known as the LTV, or Loan to Value), is key in the current market. Most of the best deals are only available to people looking to borrow 60% of their property’s value or less.

There are some good deals available for other LTV ratios, but people with very high loan LTVs, of 90% or more, may find that, at least for the time being, they are better off sticking on their current lender’s SVR.

Step 4: Once you’re armed with this information, try Confused.com to compare mortgages. Remember to look at the arrangement fees being charged to take out a mortgage - some of these can be high, and they can wipe out any savings you would make through securing a lower rate.

Step 5: If you’re not currently on your lenders’ SVR, it may also be worth finding out what this is, as it may be cheaper to simply revert to it at the end of your current deal than to remortgage. Some lenders currently offer SVRs of 2% above the Bank of England Base Rate (BOEBR).

Step 6: Once you have decided on your new mortgage, you simply need to apply for it. Once approved, it typically takes around a month for your new deal to come through, although the process can be longer if your lender needs extra information from you.

Original Source - Confused.com guide to remortgaging

Remortgaging

For all the strange and seemingly confusing jargon, it's important to remember that shopping for a mortgage is essentially just like for anything else. At its simplest, you want to pay as little as possible for the best you can get. In the same way that you wouldn't want a contract that tied you into having to shop at just one supermarket for the next 30 years, so you don't have to be tied into one and only one mortgage provider for the whole duration.

The process of remortgaging, therefore, recognises that mortgage lenders are in a highly competitive financial market. A whole range of different mortgage products are on offer, at different rates, to suit the varying needs of different borrowers, whose precise needs are going to change over the years. Remortgaging, essentially, allows an existing mortgage borrower to switch lenders or to persuade an existing lender to offer a better deal. Try a comparison site like confused.com to find the best mortgages and deals for you.

And it's precisely this "better deal" that is the sole motive for remortgaging. You remortgage to get a better deal. To return to our analogy with supermarkets, remortgaging allows you to shop around for the best deal that suits your needs and your pocket right now. And, as often as not, you'll make the change because you can get just what you want at a better price - you can save money. And given the scale of your investment in a mortgage, those savings can be truly significant, running in to literally thousands of pounds! More than that, if you continued to shop around and changed to even better terms every so often, you could end up slashing loads off your mortgage.

But it's not only cash savings that can make remortgaging a sensible option. Perhaps the terms and conditions of your current mortgage are no longer the most appropriate to your needs or maybe they are just too restrictive. Remortgaging can be a way to secure the terms that are suitable for you right now, whatever the ones that might have seemed reasonable when you first took out your mortgage.

Is this really too good to be true? Is there a downside to remortgaging? Well, it's true that there's a cost attached to engaging with the market more proactively and more flexibly. It's a cost which you should be aware of, but not one which should necessarily dissuade you from remortgaging. As with any economic endeavour, it's really just a question of ensuring that any gains outweigh the costs involved. The costs arise because of the penalty you'll face in leaving your current lender, the fee you'll need to pay for signing up with the new lender, together with any necessary legal expenses.

In a short article such as this, it's clearly not possible to cover every angle of a subject as involved as remortgaging. Nevertheless, if the prospect is one you feel worth pursuing, the steps are really quite straight forward:

1. Obtain a quote from your current mortgage provider, including any penalty for early termination. If they offer improved terms, conditions or repayment rates, there might not be any need to swap lenders anyway



2. Shop around for any new mortgage offers that are appealing and obtain detailed quotes from these lenders



3. Add together the penalty fees from your existing lender and the joining fees required by any new lender to calculate the cost of your remortgage



4. Calculate your mortgage repayment savings over a given number of years, subtract the costs you arrived at in the 3rd step, and see whether it's worth making the switch



5. If you decide to proceed, make the formal application to the new lender you've chosen



6. Allow between one and two months for the valuation of your property to be made and for any necessary legal processes



7. Sign the new mortgage deed, sit back and enjoy the new deal!

Remortgaging Tips in 2009

Once upon a time, when your mortgage deal expired you simply remortgaged onto a better rate. But times have changed. So, is it still possible to find a remortgage deal? If 2009 is the year that your fixed or tracker mortgage comes up for remortgage then the continued deterioration of the housing market, including tougher lending criteria and falling house prices, might be causing you some worry.

Although no one knows exactly how many people will be in the position of having to find a new mortgage deal in 2009, the Council of Mortgage estimates it is in the hundreds of thousands range.

But with mortgage credit still tight, most will struggle to get a competitive new deal and many will find themselves stuck on their lenders’ standard variable rate. This is especially true for people who have slipped into negative equity, perhaps because they had a small or even no deposit when they bought, as well as those with poor credit histories.

So, how do you know exactly whether you will be able to get a new mortgage deal or not, and what are the options?

The Bank of England has decreased the official interest rates for four months in a row, staring with a 0.5% cut in October. Most recently, in January, the central bank’s Monetary Policy Committee reduced rates by 0.5% to 1.5%.

Despite the cuts, not all existing mortgage borrowers have benefited. Several lenders, including Nationwide, have not passed on later cuts to their tracker customers because a clause in their terms and conditions allow them to impose a floor, or 'collar', below which the rate will never fall.

And with each month and interest rate cut that passes, fewer numbers of lenders are reducing their SVRs – despite pressure from the government to help borrowers.

New mortgages have not been much improved by rate cuts either; expert says that lenders are only likely to reduce the cost of new deals by 0.1% or 0.2% following January’s 0.5% base rate cut.

And even though the slight fall in rates will, no doubt, be welcomed in some quarters, the fact remains that lenders are still demanding large deposits from borrowers before they will consider them for the most competitive loans – if at all.

According to John Postlethwaite, consultant at Punter Southall Financial Management, the funding that lenders use to price tracker mortgages (known as Libor) has fallen to 0.6% above the Bank of England base rate while SWAP rates (which lenders use to price fixed-rate deals) have fallen to below 3.2%.

But despite cheaper funding, rates on new mortgages show little sign of budging.

“I understand that banks and building societies are reluctant to lend at the moment, and they will say that they are charging much higher margins than they used to in order to protect savers. But they should be encouraged by the government to reduce these margins,” says Postlethwaite.

Remortgaging

For people looking to remortgage, falling house prices pose a major concern. People who have built up a decent stake in their homes may now find this equity has been diminished. They may even have fallen into negative equity territory.

All this will make it harder for you to find a new mortgage.

John Phillips, financial services director at Kinleigh Folkard & Hayward, says that lenders are now starting to offer low deposit mortgages (10%) – but these are few and far between and could have hefty interest rates.

But on the plus side, Phillips says: “The start of the new year will see lenders releasing new mortgage products onto the market, and January’s drop in interest rates may well influence the products that become available in coming weeks.”

Tracker mortgage

If you need to borrow more than 75% of your property’s value (i.e. you only have a 25% equity stake or deposit) then brokers say you are unlikely to be offered a competitive tracker mortgage rate, these deals being reserved for the “best” borrowers.

Ray Boulger, senior technical manager at John Charcol, says tracker mortgages are the ideal mortgage product at the present time (see below).

But he adds: “Borrowers needing in excess of 75% loan-to-value will find very little choice, and none above 80% LTV.”

Rates on tracker products are also set to rise as a result of the lower Bank of England base rate, says Louise Bond, personal finance manager at uSwitch.com.

She argues that, ahead of the vote on Thursday 8 Janaury, HSBC increased its tracker rate from 3.64% to 3.95%, while other lenders pulled their tracker ranges for re-pricing.

Fixed-rate mortgages

Andrew Montlake, a partner at independent mortgage broker Cobalt Capital, believes interest rates are very close to the limit at which lenders can profitably offer mortgages.

“The products offered in the next few months could be the best we are likely to see in the current cycle,” he explains. “People who opt for a fixed-rate mortgage now could do very well, as interest rates will have to rise, perhaps as quickly as they have fallen, once we begin to exit the recession."

But Boulger says fixed rate mortgages still look expensive and haven’t fallen a great deal in price since December despite swap rates falling to record lows.

“The time to switch to a fixed rate may well come this year but we are not there yet,” he says. “For specific individual advice borrowers should speak to an independent or whole of market mortgage adviser.”

Remortgage checklist:

* Start looking early

If you need to remortgage in 2009 it makes sense to start looking for a new deal around seven months in advance, especially if you aren’t sure of your position. However, it is worth speaking to a mortgage broker as they may advise you to wait.

* Check how long offers are valid for

If you have low equity then you risk your property losing more value by waiting, so there is a real reason to secure a deal in advance. Some lenders, such as Nationwide and Abbey, make mortgage offers that are valid for six months, although many are only valid for three or four months so make sure you take this into consideration.

* Take fees into account

Also, make sure you take any upfront fees into account. For many people, it makes sense to secure a deal now and then you can also search again nearer the time to see if you can find a cheaper product.

Lenders such as Nationwide and Halifax offer free valuations and have no upfront fee, whereas providers like Abbey charge £199 of your booking fee upfront (valuation is free however).

* See what your current lender will offer you

Speak with your current lender before you start looking for a new deal. Some may be prepared to offer their existing customers a new deal even if the equity they have in their home wouldn’t qualify them for a mortgage if they were a new borrower.

You can either contact your lender directly or ask your mortgage broker to do so on your behalf – some lenders have online system that brokers can access to get an instant answer.

* Get ready for a valuation shock

Remember that there could be a difference between how much you think your property is worth and how much the lender’s valuer thinks it’s worth. The bottom line is, what the valuer says goes. But you could be in for a nasty shock so it is worth checking with local estate agents or online to get a rough idea of the value of your home in the current climate.

* Should you fix or get a tracker deal?

The issue for many people who are able to remortgage is whether to opt for a tracker or a fixed-rate deal.

John Charcol's Ray Boulger says that unless you have at least 25% equity in your property, then you are unlikely to qualify for a tracker mortgage.

However, if you do qualify, then Boulger recommends opting for a tracker without a rate collar and with a droplock option. This latter feature allows you to switch to a fixed-rate at anytime without penalty. Both Cheltenham & Gloucester and Woolwich both currently offer this type of deal.

Nationwide, meanwhile, offers the droplock option but imposes a collar.

Alternatively, opting for a tracker mortgage with no early repayment charge is a good way to ensure you can switch to a fixed deal when interest rates start to increase. But Boulger warns very few lenders currently offer this option.

If you decide (or are forced) to go for a fixed-rate mortgage, then Boulger recommends you choose a short-term deal as fixed-rate mortgages are expected to get cheaper later this year or next.

“Now is not the time to lock into a long-term fixed-rate mortgage,” he explains. “However, there may well be an opportunity to do so over the next two years.”

What about SVRs?

If you are unable to remortgage, then your only option is to go onto your lender’s standard variable rate. All mortgage contracts, other than lifetime trackers, have a ‘revert to’ rate in them; this will either be a normal SVR or a tracker rate.

Although this isn’t an ideal situation, there is no cost involved in being moved onto a SVR and you can leave at any time without penalty.

uSwitch's Bond says: “With more and more existing borrowers set to fall into negative equity in 2009, those looking to remortgage will find few, if any, lenders willing to take on this level of risk. People coming to the end of their existing deal should seriously consider defaulting to their provider’s SVR as this could be more cost effective than paying hefty fees for what could be a more costly option.”

Adverse Credit Remortgages Summary

What are adverse credit remortgages? An Adverse Credit Remortgage is the process of paying-off one mortgage, from the proceeds of a new mortgage (i.e. remortgage), using the same property as security, even if you have adverse credit difficulties. An adverse credit remortgage may be just the right solution for many people.

The benefits of an adverse credit remortgage include saving money by having a fixed rate remortgage or discount remortgage rate, debt consolidation on existing credit or raising cash for home improvements, a new car, business etc., or a combination of any of these benefits - even with adverse credit problems.

It is also very important to consider the implications of an adverse credit remortgage. Firstly, this will place your home at risk if you are unable to keep up repayments on your mortgage. Secondly, you should also be aware of the costs involved with a home remortgage, and you should weigh-up these costs, such as a property valuation on your home, legal costs and fees; against the overall costs if you were to take no action.

Guide to Mortgages

Mortgages should be straightforward - you borrow money to buy a house and pay interest on the loan but after a few enquiries, you soon realise that it’s not so simple after all.

In a hugely competitive market, building societies and banks are continually updating and extending their range of mortgages. The list is already extensive enough to baffle all but the most determined.

The most important points are how you pay back the capital you borrow and how you pay the interest on it.

Paying back the capital
You can either pay a little at a time as you go (repayment mortgage) or pay it all off at the end (Endowment, Isa and pension mortgages).

Repayment mortgages
Each monthly payment pays off a little of the underlying debt, as well as interest on the loan. At the end of the term the mortgage is cleared.

Endowment Mortgages
You use an endowment policy to wage life insurance and save funds to repay the loan at the end of the term (usually 20-25 years). If the investment performs badly, you could grappling a shortfall on your loan at the end of the repayment period.

Individual Savings Account (Isa) mortgages
These work on the same principle as endowments, but use an Individual Savings Account as the loan repayment method. If your investment performs badly you could grappling a shortfall at the end of the mortgage term.

Pension mortgages
Are similar to both ISA and endowment mortgages, but work on the basis that pensions (both private and company) wage tax-free cash on retirement. At the end of the mortgage term the loan is paid out of your tax-free lump sum. They are not often used as it can be risky linking pensions to other investments.Paying the interest You have to pay interest on any debt, and mortgages are no different. They differ only in the range of options offered.

Variable rates
This means you pay the going rate on your loan. The mortgage rate changes every time interest rates change or, as in most cases, the overall effect of any interest rate changes is calculated once a year and payments are altered accordingly. Whatever kind of mortgage you start with, it is likely to change to variable rates at some point.

Fixed rates
The interest rate is fixed for the period agreed - often two to five years. These are saint for budgeting or if you think rates might increase. You do not benefit if rates fall, and will grappling penalties if you try to quit. Very low rates may tempt you, but they can be used to trap you into paying over the odds. See check how long you will have to stay with the lender before you can switch without penalty.

Capped rates
These are fixed, but if rates start you pay the lower rate. Such deals can be a good buy for budgeting.

Cash back deals
This is when lenders offer money back if you take out a particular product.

Discounted rates
Under this type of mortgage the borrower is offered a discount off the lender’s variable rate. The rate paid will fluctuate in line with changes in the variable rate. The discount applies over a set term.

The government has given homebuyers a list of vital checks to help them find their way through the mortgage maze.The government suggests buyers should ask these 10 questions before agreeing a mortgage with a lender:

10 Questions you should ask your mortgage company:

1. How much can I afford to borrow?This deals with such questions as “What will the cost be apiece month?” and “What fees will I have to pay?”
   
   
2. How can I tell which mortgage rate is best for me?
   
   
3. What is the best type of mortgage for me? This deals with how to understand the jargon, such as “What do fixed rate, variable rate, discounted or low-start, and flexible mean?” and “Will this mortgage suit my circumstances now and in the future?”
   
   
4. How should I repay it?“Why are you trying to sell me an endowment policy, or a pension or an Isa?”, “Why is it best for my circumstances?” and “What commission are you being paid?”
   
   
5. Can I make lump sum payments to reduce the size of the loan?
   
   
6. Are there any redemption penalties?
   
   
7. Does this mortgage come with compulsory insurance?
   
   
8. What other charges will I have to pay?
   
   
9. What happens if I can’t pay?
   
   
10. What about the small print?
    

Bad Credit Remortgages Advice

In recent years, more lenders are increasingly offering Bad Credit Remortgages. A UK remortgage with bad credit is when mortgage holders pay off their current mortgage using a new mortgage. The lender uses the same property as security.

The term “bad credit”, is a credit rating that describes a person as having poor credit status. Those who have filed for bankruptcy, failed to repay past loans, and have received court judgments for unpaid debts, are categorized as people with a bad credit history. A FICO score of 580 and below is considered to be a bad score.

Benefits

With increased remortgage availability, there has been an increase in lender competition. This means that interest rates have decreased significantly. If you have bad credit, there are a number of benefits to taking out a remortgage.

By switching to a discount or fixed rate remortgage, you save a substantial amount of money. By consolidating debt, you can pay off credit cards, loans etc. You could also obtain the necessary cash for projects such as home renovation or buying a new car. There are also a full range of fixed, capped, discount, tracker, and flexible bad credit remortgages deals out there.

Implications

It is very important to consider the repercussions of taking out a bad credit remortgage. If you are unable to keep up with the mortgage repayments, your home may be at risk for repossession. By adding further debt to your mortgage, you will increase the overall cost, as well as the length of the repayment term.

You should also be aware of the extra costs involved with a home remortgage. It is important to evaluate costs such as a property valuation on your home, legal costs, administration fees, and compare it to the overall costs if you chose not to remortgage. It is also essential to understand that rescheduling your debts over a longer period, and making a smaller monthly payment, will mean that you will repay more interest and therefore more money.

You should also remember that you will be switching unsecured debt into borrowings that are secured. Bad credit remortgages are more expensive than mainstream mortgages and will remain so. The disadvantage is that you may have to pay a slightly higher interest rate than you would with a regular mortgage. As well, you can only get a bad credit mortgage through a mortgage broker.

Considerations

Although your credit status is probably the most significant factor determining what kind of mortgage rate is available to you, many lenders are now taking a more flexible position on who they lend to. If you have a bad credit history, and you are looking to get a better deal, getting good financial advice can really help.

Seek a bad credit advisor’s advice, and most importantly, make sure you can handle more debts secured against your home. If you do not keep up with your mortgage repayments, your house could be repossessed.