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How soon after filing bankruptcy can you obtain a mortgage without a huge down payment?
New FHLMC guidelines require 10 years since release of bankruptcy. However, FNMA guidelines are usually 2 years with re-established credit and the rest of your credit package needs to be in good order. There are many lenders out there today that are not concerned with the bankruptcy and will allow higher loan to value. You will however be subject to higher interest rates and prepayment penalties. So read the fine print. This is not to say these are bad, often these loans can be used as a stepping stone to getting back on the right track. Often you can purchase a home, get your credit act together, then after two years, if you have kept your payments up and all the rest of your credit situation has improved, you can refinance to a lower rate.
How much should my closing costs be?
Closing costs will vary from state to state, however some basics do apply. There are credit reports ranging from $40 to $60, appraisals $200 to $500 depending on the value of the property could be higher, loan processing $200 to $400, title charges vary and depend on the loan amount and will also differ if purchase or refinance. Other charges include, escrow or closing attorney fees, lender fees can run $300 to $700. Points or origination fees can also be added to the list. Those fees are all considered non-recurring fees since they are unique to getting the loan. The recurring fee would be things like property taxes, insurance, interest and private mortgage insurance. So get a quote in writing and compare.
How difficult is it to obtain mortgage when credit rating is very low? Spouse with bankruptcy & foreclosure, wife paying off credit cards via Consumer Credit?
If you have the income to support the payments and are willing to pay the price you can often get financing through a lender that specializes in your situation. The rate will be significantely higher and you might have to deal with a prepayment penalty, but if you can tough it out for two years, make all the payments on time then you can refinance and get a lower rate. Often the B & C lenders understand this and only have a prepayment penalty for two years.
Why, besides the obvious answers, is a down payment needed ? There are books that says its not needed ?
The lenders idea of down payment is to show them that you, the borrower have a vested interest in buying a piece of property. A down payment reduces the risk to the lender of the borrower defaulting on the loan. There are however, lots of programs available today that require little or no down payment. Keep in mind, ultimately, you the borrower will pay for the lender taking on the higher risk the in the form of higher interest rates and PMI (Private Mortgage Insurance).
I really want to own my own home, but Iīm not sure I can afford it. Where do I start?
Lots of people donīt even consider buying a home because theyīre afraid they canīt afford it. But for most people, home ownership is within reach. In fact, for many, home ownership is as affordable as renting - in some cases even more affordable.
The best place to start is with a mortgage lender affiliated with the Mortgage Bankers Association of America; a lender can help you explore all the options of home ownership.
How do I know how much I can afford?
Before you start looking at homes, you need to have some idea of what you can afford. As a general guide, you can purchase a home with a value of two to three times your annual household income, depending on your savings and debts. However, you may be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value.
What does my mortgage payment include?
For most homeowners, the monthly mortgage payments include three separate parts: a payment on the principal of the loan (that is, the amount borrowed); a payment on the interest; and payments into a special account (called an escrow account) that your lender maintains to pay for things like your hazard insurance and property taxes. These elements are called P.I.T.I. (Principal-Interest-Taxes-Insurance).
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