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A mortgage loan is probably the largest loan you will ever take on, and certainly the most complex. Getting a loan these days is not easy, but with a bit of planning and preparation, you stand a better chance of getting the loan you want.

Our tips for getting the mortgage you want:

• Before you request a rate quote , do your homework. Do some looking around to see what interest rates are and begin to think about the type of loan you need. It is a good idea to use a mortgage calculator to help you to get an initial idea of how much you can afford in a monthly payment. However, read our prior blog post for a few words of caution regarding mortgage calculators.
  
• Ensure your credit report looks good and is accurate. Avoid making significant purchases at this point and pay down the debt you have. You want the best credit score possible before you apply.
• Contact a national or local financial institution, mortgage lender or credit union and request a quote. A quote should not require any cost to you, but it will tell you what the lender can offer to you. You want to compare loans from several companies.
• Determine the down payment requirements. Most lenders require 20 or more percent from homebuyers unless you obtain mortgage insurance (MI) which can drastically impact the terms of your loan.
  
• Negotiate to get the lowest interest rate possible and the terms you want. You may get the lower to cover some of the closing costs, too. The key here is to ask for the best offer possible.
• Provide all documentation to back up the details you provide on your mortgage application. You want to ensure you have the most up to date information because the lender will require verification.

Don’t try to “do it yourself”

Getting a mortgage loan is definitely not a DIY process these days. With the changes to the lending market in recent years, it’s never been more important to talk to a qualified, professional loan officer to help you make an informed decision about this important investment.

Getting behind on payments can happen to anyone, but not getting help to get caught up can mean a significant risk of losing your home. And for those who become behind or facing the prospect of foreclosure, there may be government help for late mortgage payments. Keep in mind that the government is not going to simply give you money to get your loan caught up.

However, today’s government regulations do offer some protection for homeowners, and many lenders are at least making an effort work with borrowers to get their loans back on track.

First steps you can take

The government suggests individuals to take their first step by calling their mortgage lender and determining if the lender can help them directly. Oftentimes, lenders are willing to adjust interest rates or to help individuals to get caught up by making home loan modifications. For example, the lender may agree to tack on the missing payments at the end of the loan or may agree to allow you to repay the missing payments over a period of time.

Making Home Affordable

Another option that may work if the lender is not immediately willing to work with you is the Making Home Affordable Modification Program , called HAMP. This is a form of government help for late mortgage payments. You may qualify under certain circumstances, if you meet the right requirements, such as the following.

• You are living in the home you are behind on mortgage payments (it must be your primary residence).
• You owe less than $729,750 on your mortgage and began it prior to January 1, 2009.
• Your payment on the loan is more than 31 percent of your gross income at this point.
• You cannot afford to make your mortgage payment due to some type of financial hardship, such as a job loss or because of medical bills.

In these situations, the lender may agree to work with you under this government help for late mortgage payments. You will need to apply for this type of help through the federal government’s website for the program. You may or may not receive help. It is important to consider your long-term goals here. In some situations, if you do not have the financial means of being caught up, you may lose your home due to the inability to pay your loan.

In days past, if you had a less than perfect credit rating it usually meant that someone was irresponsible or simply unethical in how they handled debt. Today, many hard working people have less than perfect credit due to a number of reasons not all of which are under their control.

At the same time, banks are being much pickier about whom they lend money to and that means that the credit ratings required to get loans are higher than ever. Finding a mortgage lender that can help you if you have less than ideal credit will require that you accept a couple of things.

You May Pay Higher Interest Rates

Credit ratings improve when you’ve been on time with payments for a while and when you’re re-established that you’re not an extreme risk to creditors. One way of doing this is to take out a high interest loan for a while and, when you’ve been paying on it regularly, to re-apply for a better loan.

Higher Down Payments

Another effect of having weak credit is that you may have to come up with more money for your down payment on your loan. This does have some advantages, however. Principally, it lessens the amount that you have to pay interest on and that means that your home is more affordable from the start.

Mortgage Insurance

Everyone needs mortgage insurance for higher LTV loans.  However the amount and rate of mortgage insurance may increase if your credit isn’t so good and this will have to be factored into the loan. A good mortgage broker that helps people with less than perfect credit can make sure that you understand this insurance and can make sure that you don’t end up overpaying for it. This insurance may well be the only reason that you’re even able to finance a home, so don’t be put off by the additional cost that it adds to the purchase price.

A good mortgage broker that helps people with less than perfect credit can find most anyone an affordable, valuable loan that will make a home a realistic option for them.  And at NOLA Lending, we take pride in serving the needs of our customers so that you get Your Loan, Your Way!

Simply put, mortgage insurance (also called “PMI” or sometimes simply “MI”) is designed to provide additional security for home mortgage lenders to ensure that they’ll be insured in the event of a default. The insurance doesn’t cover the homeowner: it covers the mortgage lender or banker. Mortgage insurance is a requirement for some mortgages and, if you don’t have a large enough down payment, you’ll almost certainly have to pay for this coverage.

Why it’s Necessary

When a lender is financing 80 or more percent of the cost of your home, they’ll usually require that you have mortgage insurance. This is because they’re taking a substantial risk in providing this funding and, if you default, they need to make sure that they’re not taking all the risk.

When you apply for your first mortgage, you’ll have to count on this cost being added to the cost of your mortgage as a whole. Most lenders will not be willing to finance a home without some type of risk reduction which is what this insurance provides.

Do You Really Need This Extra Expense?

In a way, mortgage insurance is purely another cost to the homeowner. There are some potential ways that you can lessen it, however. Tax codes allow mortgage insurance to be written off of your taxes, but you’ll have to have an accountant guide you through this process to make sure that you’re doing it correctly, and confirm your income qualifies you for the deduction.

You should also keep in mind that the mortgage insurance may be the only thing that’s even making it possible for you to buy your home. When the lender is putting down over 80% of the purchase price to secure the property, they’re taking a lot of risk. It makes sense for them to demand some way to make sure that they’re not taking on the full amount of that risk and, with mortgage insurance, it’s lessened for them somewhat.

Avoiding Mortgage Insurance

The only way to avoid paying for mortgage insurance is to offer a bigger down payment on your home – typically at least 20%. If you can do this, the lender will forego the requirement for the mortgage insurance. If not, however, you’ll have to factor this cost into the total cost of your mortgage.  There are also options for PMI buyouts, single premium or buy downs for discounted premiums monthly.  You should discuss these options with your NOLA loan advisor.

The laws that govern mortgage insurance have been changed a bit to make it a more valuable product for consumers and easier to understand. While it may seem like something of a disappointment to have to add this onto your payment for your home, it does make it possible for many people to get the home they want with smaller down payments.

If you have an adjustable rate mortgage or a home mortgage with rates that aren’t favorable, you may want to consider refinancing. Before you do, however, you have to take a look at your situation and see if it’s a good time to go through with it. Even though the rate will drop, there are some big considerations with this move that you have to take into account.

Has Your Credit Improved?

Your score is important and has an impact on your rate. If you’ve suffered financially in the last few years and your credit score reflects as much, you may want to still call so your lender can tell you what to work on. To get the most basic shortcomings on a credit report fixed:

• Bring all your accounts up to date
• Hold off on applying for any new credit such as credit cards or finance company loans

Some credit repair can be quicker than you think.

Are You Staying In Your Home?

Discuss it with your lender if you think you may have plans on moving within 5 years. They may offer you a different set of mortgage options to get the benefit of a better rate but keep the cost low with products like adjustable rate mortgages.

Talk to a Loan Officer

It’s important to talk to a mortgage advisor about your refinancing options and not just take advice from the neighbor or a family member!

The mortgage experts at NOLA Lending will listen to your situation and may advise that you consider refinancing to bring down your rate. There is sometimes a real financial need to take this step and to bring your rate down to an affordable level. Talking to an expert is the best way to find out what’s out there and how you can get credit in these rather tough times.