Important Information for Joint Mortgage Loan Applications

If you and your spouse are thinking of applying for a joint mortgage loan but one of you has bad credit, you may really have a difficult time. This is because the lender usually considers the lower credit score in deciding the rate of interest it will charge to the both of you. Here are some of the things you have to know about joint mortgage loan application with bad credit.

1.) The Person with Higher Credit can Apply for the Loan Alone
Although with two borrowers it is easier to get a higher amount of loan, this is only possible if both of you has good credit. Thus, if one of you earns a good income and has a good credit, you can already qualify for the mortgage.

The person with the higher income is usually considered as the main borrower. Just know that you will not be qualified to a bigger of loan with only one applicant.

2.) Find a co-signer
A parent, family member or close friend who can act as a co-signer can help you qualify for the amount of loan that you desire. For as long as their credit is good, any of them can take the place of your spouse with bad credit as a co-applicant. If you are thinking of obtaining an FHA mortgage, you must find a co-signer who is related to you. As a word of caution, you might have difficulties convincing your potential co-signer to sign for you if he or she has a higher income than you and your partner. The reason for this is that he or she will be considered as the primary borrower and that will be too risky for him or her.

3.) Legal Information
If you have finalized your decision to apply for a loan using one of your names, you can still request for the deed of the property to be placed on both your names since the deed and mortgage are usually separate. But, there are instances when the lender has to decide on this so make sure to check their policy first. Moreover, if only one name is stipulated in the mortgage but the two of you will pay for it, make sure to have a signed agreement in place just in case you separate. This is especially a security measure for couples who are not married.

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Why Refinance your Mortgage Loan?

The Fed’s upcoming announcement of ending the program led to expectations of rising borrowing costs. This is the only way of most companies to raise their funds. According to Wilbur Ross, chairman and CEO of the private equity investment group WL Ross & Co, this is the best time to refinance. He shared how he has been trying to refinance the company’s debt for the past year. This is because there is no assurance of a maximum limit to rate increases. However, the rates will not reduce for sure.

Lower loan rate is one of the best reasons to refinance. The usual rule is that refinancing can be done if the interest rates will be reduced by at least 2%. At present, lenders say that a 1% savings is not a good incentive for borrowers to refinance. Lower rates of interest increases savings, pushes up equity rates and reduces the amount of monthly payments.

Debt consolidation is another good reason to refinance. Exchanging high interest debts with low interest mortgage seem to be a good option. However, refinancing does not easily result to financial prudence. The truth is many people who have accumulated high interest debt on credit cards, cars and other bills have a higher chance to do it again once there is credit available.

When this happens, loss becomes higher, refinancing fees are wasted, equity in the house is lost and years are extended to higher interest payments on new mortgage. High interest debt when the credit cards are maxed out is also a possible consequence. All these will result to endless debt.

Refinance rates are lower than purchase mortgage rates. According to a report of the Mortgage Bankers Association, both refinance and purchase mortgage applications increased. There is a decline in volume but the refinance index increased by 2.7%.

Freddie Mac reported a 30 year fixed-rate mortgage averaged 5.05% and the highest since its increase from a lowest record of 4.17%.

Economists say that rates have to increase more to squelch a housing market recovery and added that if they do that, the federal government would pull down the rates.

A mortgage researcher Keith Gumbinger says increase in interest rates is unwelcoming and not enough to kill purchases in the housing market.

Patrick Newport, an ISH Global Insight economist says that rates should be higher than 6% to discourage big amount of sales.

They are still lower in historical standards even if rates have increased rapidly. 30 year fixed loans have averaged 6.9% for the past 20 years and averaged a lower of 5.93% average for the past 10 years, Findlay says.

Fourth quarter home sales increased because of low rate and low home prices, according to the National Association of Realtors. It rose 15% from the third quarter. But when federal tax credits boosted its sales, they were 20% lower.

The NAR says that 78 out of 152 metropolitan areas were increased year-over-year for median prices just for single-family homes and it is expected by Newport that its prices were to drop further to turn around during middle of the year.

Other larger markets also posted good price gains because of the strong job growth. Median was increased to 8.1%, 4.2% and 4.1% year over year in Washington, D.C, The Boston region and Austin respectively.
Nar economist Lawrence Yun says that 2010 sales noticeably recovered. Yun expects that it will still manage to gain more despite the increase in rate that he predicts and probably will be 5.5% higher by the end of the year.

But Yun says that job creation will still decrease rates and still improve home sales.

On the other hand, Gumbinger says that refinancing activity will be affected when rates will be increased. According to Mortgage bankers Association 10 year treasury bonds are followed by mortgage rates, which have increased lately.

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The best mortgage for you depends on a lot of different factors.

Here is a quick list of different factors and loans that you may want to consider…

Conforming standard loans are for amounts up to $417,000 and eligible for purchase by Fannie Mae and Freddie Mac.

Conforming jumbo loans are for amounts up to $729,750, the maximums varying by county, and eligible for purchase by Fannie Mae and Freddie Mac.

Non-conforming jumbo loans are for amounts that exceed the conforming jumbo county limits, which range up to $729,750.

FHA standard loans are for amounts up to $217,050 and eligible for insurance by FHA.

FHA jumbo loans are for amounts up to $729,750, the maximums varying by county, and eligible for insurance by FHA.

Now, things may have changed quite a bit…

it was not long ago that you could get a 100% ltv loan, or get a loan with bad credit.. meaning even no credit.

you could also get a liars loan… this was really called a no doc loan. Meaning you got the loan based on not having to fill out any financial documentation.

All you essectially had to have was a pulse.

Now, times have changed, and things aren’t like that anymore….

One thing to note, interest rates are looking pretty good.

As of this writing, you can get a 30 year fixed rate loan for 4.5% That is really amazing…

Rates have never been this low.

Talk to your mortgage broker or loan officer to find out what other options may be ther for loans and what you can qualify for.

In recent years, the housing market has been on a very bumpy financial ride. Due to the sub-prime mortgage crisis which resulted in millions of homeowners losing their homes due to the inability to pay their monthly mortgage payments, President Obama’s mortgage refinance stimulus plan was implemented to help people stay in their homes and encourage people to buy a home. The plan included lowering interest rates so that people could take advantage of the savings. Now that the economy has shown signs of improving, many people are wondering how long mortgage rates will stay low or if there is going to be an increase in the coming months and next few years.

In this current economic environment where improvement in the economy is not happening as fast as we would like, as well as the continued Government and Federal Reserve support, most experts agree that for the next few months, there should not be much of a change in mortgage rates. Currently 30 Year Fixed mortgages rates have been hovering just under 5%. It is expected that 2010 will see rates rises to just over 5%. This is mainly due to the economy not getting worse and there are some signs that the economy will get better. However, many economists predict that low mortgage rates will be here for a little while, but not for long.

Economists suggest that as the economy grows and banks begin to increase their lending, mortgage interest rates will steadily increase to rates preceding the housing market crisis. In the next few years, many predict the pre sub prime mortgage crisis rates will return. This may be a good time for prospective homeowners to consider buying a home as the rates will not be making any further dramatic reductions, and over time they will begin to rise. Locking into a low rate now will definitely save homeowners money in the future as the rates start to rise. As well, by the first half of 2010, the Federal Reserve’s Housing Recovery Plan of buying as much as $500 billion of securities backed by Ginnie Mae, Freddie Mac, and Fannie Mae, will be coming to an end, so mortgage rates are expected to rise. Many experts believe rates will rise to over 5%.

Another consideration many housing market forecasters are worried about is inflation. Concerns about inflation could send Treasury yields higher which would cause an increase in mortgage rates. So, the mortgage rate prediction by many economic experts is that for the next few months, rates will stay about the same, and then they will begin to slowly rise in the next few years, depending on the state of the economy and the recovery progress of the housing market. But do not expect a continued decrease and the rates will eventually go up.

If you are considering refinancing or planning to purchase a home in 2010, this may be a great time to lock into a low interest rate mortgage. If not, you may miss out on a great deal if you wait too long.