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Making A Large Purchase While You’re Trying To Acquire A Mortgage Loan

Posted by on May 19th, 2015 in Uncategorized | Comments Off

Typically, lenders always tell you to avoid making any large purchases when you’re trying to acquire a home loan. A large purchase can result in an increase of debt, which can disqualify you for a loan. Even purchases in cash can be problematic because you may no longer have enough for the down payment or to cover issues that come up. Still, there are times when it’s simply unavoidable. Your car could completely break down, or you could have a business expense.

Always Purchase in Cash If Possible

Say you need to purchase a car. You may be better off purchasing a temporary $2,000 vehicle than getting a loan for the same amount — if you have the additional cash around. Simply spending a large amount of money won’t usually harm you, it’s taking out additional credit. Just don’t spend so much that you don’t have a buffer should you need to pay more for the property you’re pursuing.

Pay Attention to Your Credit Report

When you do need to make a large purchase on some form of credit, you need to pay attention to the changes made to your credit report. Make sure that all of the related credit queries only count as one against your account, and make sure that there are no errors on the reporting of the new account that you’ve created. But regardless, be prepared to see your credit score take a significant hit. Credit scores are based not only on the amount you owe but also on the average length of your accounts and whether you’ve pursued credit recently.

Go For Installment Loans, Not Credit Lines

Installment loans are generally better for your credit than credit lines. Installment loans include personal loans, auto loans and — of course — home loans. So if you need a thousand dollars, it may be better to take a personal loan rather than to take out a cash advance on a credit card– unless, of course, you will be able to pay the credit card back before the mortgage loan is finalized.

Obviously, it’s always best if you can avoid making a large purchase on credit until after your mortgage loan is dispersed. Still, a mortgage process can take a long time and there are times when you have to spend the money. You may need to request a smaller loan or look for a less expensive house, or contact home loan company, like Dynamic Mortgage Concepts Inc, about other lending options for your situation.

What Type Of Home Loan Is Right For You?

Posted by on May 6th, 2015 in Uncategorized | 0 comments

If you are in the market of buying a house you might be wondering what kind of loan is the best for you. There are many different kinds of loans out there and it can be hard to sift through the massive amounts of information. Here are some things that you need to know about the different kinds of mortgages that are available to you.

Adjustable Rate Mortgage (ARM)

An adjustable rate mortgage is a type of mortgage that has a low interest rate at the first and then raises after a certain period of time. Depending on the type of the ARM you could have a fixed rate for 3, 5, 7 or 10 years. After that the interest rate raises based on the market values.

The advantages of this type of mortgage are that you get a lower interest rate at the beginning. This is a great option for people who know they are going to live in the house for only a short period of time. For example, say you have a work assignment in a certain city for 3 years. In this case an ARM might be great.

The disadvantage is that there is a risk. If you are unable to see you might be stuck with a high interest rate that is hard to bare.

A Balloon Repayment

Much like the ARM the balloon has a lower interest rate at the beginning. What the lender will do is take the loan and amortized it over a certain amount of time. For example, you might get it amortized over 30 years so that your payments reflect what a 30 year mortgage would be, but the loan only lasts as long as the balloon, usually around 5-7 years.

At the end of that term you will be responsible to either refinance the home to a different kind of loan, or pay off the balance. For this reason, you should only do this loan as a short-term loan.

Conventional Loan

In this case you would choose a longer term on your loan, like 15-30 years and the rate is fixed. The rate won’t be as low as a balloon or an ARM but it will stay the same and cannot change. This is the best option for people who are planning on staying in their house for longer than 5 years. It also gives you peace of mind knowing that what you signed up for in the beginning.

By understanding the different types of mortgages you can choose what is right for you. To learn more about home loans contact a business like MCS Bank