American Mortgage Resource, Inc.

Providing the Best Financial Resources for Boston and Massachusetts

Tag: loan approval

4 Factors to Consider Before Getting a Mortgage

Buying a house is one of the biggest financial decisions that you can ever make, and therefore you need to make an informed choice. This is critical, especially if you will get your house on mortgage terms. There are several steps that you need to follow before you can begin the process.

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  • Start by Checking Your Credit Score

Before you can start a mortgage application, the first thing that you need to do is to check your credit score. A higher credit score plays a significant role in your mortgage approval process. Before any lender can approve a mortgage, the first thing that they do is to check the creditworthiness of an individual. Ensure that your credit score is accurate to increase your chances of approval.

  • Larger Down Payment

When you make a large down payment for your mortgage, you get better terms. Putting more money as a down payment ensures that you pay less every month. This simply means that if your down payment is high, you do not require as much money from your lender. In addition, the lender considers you as a lower-risk borrower.

  • Steady Source of Income

Besides the lenders accessing your credit history and the ability to make a down payment, they also review the employment history. This is to ensure that you have a steady source of income every month and that you can service your loan. Therefore, it is best to avoid switching careers or changing jobs when you are activity looking to buy.

  • Check Pre-Payment Penalties

You need to check with your lender if you will incur penalties for early loan repayment. Some homeowners, once they experience a cash windfall, may decide to double up their payment, clear the loan sooner and end their term. Check to make sure that if you decide to do the same, you will not incur any pre-payment penalties.

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Conclusion

Homeownership is a dream come true for most people. However, sometimes a mortgage is the only option to getting your dream home. The terms of getting a mortgage can sometimes be complex. Therefore, it’s advisable to speak to mortgage professionals at American Mortgage Resource Inc. We can advise you on refinancing your mortgage, buying a new home, and cashing out on your home equity, as well as assist you to apply, qualify, and get approved for a new loan.

Highlights & Drawbacks of FHA Loans

According to Bankrate, “An FHA loan is a government-backed mortgage insured by the Federal Housing Administration, or FHA for short.” These flexible loans allow you to have a better chance at qualifying for a home loan. From low-credit scores to a minimal down payment, an FHA loan gives you the opportunity to become a homeowner. How so? Follow along in our blog as we discuss the highlights and drawbacks of FHA loans.

The Highlights

When you are in the market to buy a home, it can be difficult to find a home loan if you have poor credit or a small down payment. However, with an FHA loan, you can qualify and even get a decent interest rate too.

  • Credit Score: Bankrate states that a FICO score of 500 to 579 is needed with 10 percent down. For scores 580 or higher, a payment of 3.5 percent down is required. If you’re someone with a credit score in this range, you can be approved. Even borrowers with a history of bankruptcy or foreclosure get approved.
  • Down Payment: Don’t have a lot of cash for a down payment? Then an FHA loan might be right for you. You can put little down and still have funds leftover for other financial investments.
  • Renovations: If your property needs renovations, FHA 203(k) loans allow you to fund home improvement projects and purchase a house at the same time. This loan is simple to qualify for and is relatively affordable.

The Drawbacks

Although FHA loans are attractive to many first-time buyers, they aren’t for everyone. It’s important to take a closer look at what this loan entails.

  • Mortgage Insurance: With an FHA loan, you will be required to pay an upfront premium and a monthly premium. The upfront premium costs can be included in the FHA closing costs OR rolled into the loan amount. For monthly premiums, this fee will vary.
  • Limited Loan Choices: There are two basic choices when it comes to FHA loans: 15-year or 30-year fixed rate loans. This may be fine for one borrower, but may discourage another borrower if they are looking for something adjustable/interest-only.

The Verdict

At American Mortgage Resource, Inc., let us discuss your loan needs together. From FHA loans to conventional loans, we want to find the perfect loan for you. Contact our team of professionals at (617) 972-8588 for more information about our affordable loan programs. We look forward to speaking with you soon!

Reasons Why Your Mortgage Application Could Get Declined

When you are trying to apply for a mortgage, you want to do everything by the book to be approved. However, there are instances where a mortgage lender will deny an application. From bad credit to an insufficient down payment, you don’t want to fall short with certain requirements by the lender. Learn more about why your mortgage application could get declined.

Low Credit Score

The higher your credit score, the better chance of securing the mortgage you want. On the other hand, if you have a lower credit score, you may not be approved. The minimum credit score depends on the lender and type of mortgage, so be aware this can range anywhere from 500 to upper 600’s. Yes, you can be approved with a low credit score, but the lender might ask you to make a bigger down payment.

High Debt-To-Income Ratio

How much of your monthly income goes to monthly debts? The lender will review the percentage of this ratio and determine if you are able to make loan payments too. Experian comments, “It may be harder to secure a loan if your housing payment is 28% or more of your gross monthly income (31% or more if you’re applying for an FHA loan).”

Small Down Payment

Applying for a mortgage loan is a big commitment, as you and the lender already know. That’s why putting more money down for the loan indicates that you are serious. It will also improve your chances of being approved. Tip by NerdWallet: “Putting at least 20% down on a home will increase your chances of getting approved for a mortgage at a decent rate, and will allow you to avoid mortgage insurance.”

Missing Application Information

It’s key to look over the information on your application before submitting it. If you are missing important details, then you can be denied approval. Review your application carefully by yourself or with another person you trust to ensure you have everything ready to go.

Final Thoughts

There can be a lot involved when applying for a mortgage loan. Luckily for you, American Mortgage Resource, Inc. does the heavy lifting for you. We have simplified the application process so you can fill out information online, at your own pace. If you have any questions about your app, please contact us today!

The Best Ways to Use a Home Equity Loan

What are you envisioning for your home? Are you looking to renovate the kitchen? Perhaps replace the garage door? To fund your house projects, you can find financial support through a home equity loan. Bankrate comments, “Tapping your home equity can be a convenient, low-cost way to borrow large sums at favorable interest rates in order to pay for home repairs or debt consolidation.” Continue reading to learn about more ways you can use your home equity loan.

Home Improvements

Financing large projects is feasible with a home equity loan. With fixed monthly payments and a large sum of cash up front, you can pay for projects like a kitchen remodel, bathroom renovation, deck installation, and more. Once these projects are finished, they can raise your home value over time and give you a good return on your investment. Are you planning to sell your home in the future? Prospective buyers will take an interest in your new improvements.

College Debt

While student loans are more conventional, another route you can take is by using home equity. You may find that a home equity loan gives you more of an advantage due to the lower interest rates. Additionally, you can extend the term of the loan and therefore reduce your payments. However, you want to be careful not to default payments, otherwise, you could lose your house. Before using home equity for student debt, calculate the monthly costs and see if you can make the payments.

Debt Consolidation

Are you paying high-interest debt on a credit card or car loan? Consider consolidating your debt with your home’s equity. This way, you can pay off personal debt at a lower interest rate and set a longer term. You will be able to make monthly payments quicker and easier. Note: using home equity makes this secured debt – meaning the collateral is your home. Bankrate states, “If you have a solid debt payoff plan, using home equity to refinance high-interest debt can help you get out of debt faster.”

Conclusion

When you need a home equity loan, contact the team at American Mortgage Resource, Inc. Our professional lenders have the answers to your loan questions and are friendly when helping you with your loan needs. Get started on the loan application process today!

Home Equity Loans: The Answer You’ve Been Looking For

Qualifying for certain loans and credit cards can be a difficult and confusing process for many of us. Homeowners have a unique advantage when it comes to borrowing money in a pinch as they may be able to qualify for a home equity loan. Follow along below as we discuss home equity loans and their pros and cons.

What’s a Home Equity Loan?

A home equity loan is a fixed or adjustable form of credit secured by how much equity you have in your home and enables you to borrow against that equity. Essentially this type of loan is a second mortgage as you will have to continue paying your primary mortgage while simultaneously making payments on your new home equity loan.

Pros

Home equity loans can save the day when you need help repaying higher interest debt elsewhere or funding home renovations. A distinctive benefit these loans offer is that while their interest rates may be slightly higher, any interest paid on them is tax deductible.

Cons

Undoubtedly the biggest risk in taking out a home equity loan is that your lender may be able to force you to sell your home to resolve the loan if you are ever unable to make your payments. Additionally, your home will have to be appraised to establish its value and you will have to provide proof of sufficient credit and income.

Final Thoughts

When considering applying for a home equity loan or any other type of loan, be sure to shop around to compare the varying plans offered by banks, credit unions, and mortgage companies in your area. At American Mortgage Resource, Inc. we have relationships with over 20 different lenders and strive to make the process as simple and smooth as possible. Contact us here to learn more about our affordable services.

Why Your Credit Score is Important for the Loan Process

In order to get the best deals and rates on a home loan, you need to have a good credit score. Mortgage lenders are going to look to see if you are a responsible borrower and making your payments on time. Additionally, your credit score can provide the information a lender needs to determine your eligibility, including which rates they are going to offer and what type of loan you qualify for. Continue reading to understand how your credit score is important for the loan process!

Are You Credit Worthy?

Before you begin shopping for loans, have your credit score ready to go. Check online with an accredited website for the most accurate results. It’s important to mention that most lenders are going off of a FICO credit score, which ranges from 300-850. If your credit score falls under the category of “fair” or better, you’re in the average range for an American borrower.

Is Your Credit Enough for a Home Loan?

According to Meridian Banker, “the credit score needed to buy a house greatly depends on the type of home loan you apply for.” Some of the most common loans you are going to come across are conventional loans, FHA loans, and VA loans. These loans start at a minimum of 500-620 or higher. FHA loans are beneficial for borrowers with low credit scores, while conventional and VA loans are better if you’re in the “good” or “very good” range.

What about Rates?

The higher your credit score, the lower your rates are going to be. The amount you’re paying back on the loan is greatly affected by the rate at which it’s set. Essentially, a lower rate is going to save you more money over time. This is why having a good credit score can expand your loan options, while also giving you better rates in the long run.

Conclusion

For more information about the loan process and what it involves, the professionals at American Mortgage Resource, Inc. are here to answer your questions. We want you to be confident in your financial decisions, so call us at (617)-972-8588 or visit our website to send a message. We look forward to hearing from you!

Loan Application Terms You Should Know

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When you’re starting to apply for home loans, you’ll come across some financial terms during your research. While you might be familiar with a few words and phrases, there could also be a couple of confusing ones too. Loan jargon isn’t a part of everyone’s vocabulary, which is why we have written down terms that might be helpful on your loan application journey!

Prequalification

A quick way for lenders to tell you what kind of loan, if any, you may qualify for. It’s important not to confuse prequalification with preapproval, which is a more formal commitment from a lender and often requires additional documentation.

Net Income

Your take-home pay after taxes and other deductions, such as health insurance. Simply, this is the amount you see on your paycheck. Note: your net income is different from your gross income, which is your wages without any deductions.

Cosigner

A cosigner is someone who signs for your loan with you. If your credit score isn’t high enough, a cosigner, which is essentially someone who is legally obligated to repay your loan if you’re unable to, may be a way to get the money you need.

APR

This stands for annual percentage rate. An APR includes your interest rate, but also wraps in things like one-time charges and annual fees. You can use an online loan calculator to determine how APR can affect your monthly payments.

Debt Consolidation

If a lender mentions debt consolidation, this means a combination of debts into a single loan. Anything from credit cards to house bills is included.

Conclusion

At American Mortgage Resource, Inc., we make the loan application process simple. If you have any questions about our programs or lending options, visit our website for more information. You can also contact our team by calling 617-972-8588. Get approved today!

When Should You Refinance?

Refinancing can seem enticing; however it is important to know when the most optimal time to refinance your mortgage is. If you’re ever wondering when the right time is, continue reading along with this month’s blog!

First

The only way you will be able to refinance your mortgage is if you are approved for the loan. If you aren’t approved, you will not be able to reap the benefits of refinancing. However, this is usually the last step in your process. When it comes to refinancing, you should always anticipate that you would be approved. If you know for a fact that you are going to qualify, this is the first step in deciding! Knowing that you will qualify and be approved will save you time in the long run. 

Second

When considering the option to refinance your mortgage, you should anticipate living in your home for at least five more years. If you’re already considering a move or wondering how soon you can leave, refinancing might not be the best option for you. However, if you’re interested in investing time in your home, refinancing is perfectly acceptable!

Lastly

Last but certainly not least; you should only consider refinancing your mortgage if the current interest rates are lower than your existing rate. We suggest ensuring that the interest rate is at the very least 1% lower. Otherwise, there is no true reason for refinancing your mortgage as you are already reaping as many benefits as possible. If you are still interested in eventually refinancing, continue to check with the current rates. When you finally see a drop that is satisfying, then you can jump on board with starting to refinance your mortgage. 

Conclusion

If you are interested in refinancing your existing mortgage, be sure to check that now is the right time. If you are confident and ready to get stared, be sure to check out American Mortgage Resource, Inc. to learn more!

The Ultimate Checklist for a Mortgage Pre-Approval Letter

When you’re ready to start shopping for a home, it’s good to come prepared with a pre-approval letter. Marilyn Lewis from NerdWallet states that “unlike a pre-qualification, a preapproval letter lends weight to your bid on a home, proving to sellers that you have the financial clout to stand behind your offer.” From bank statements to W-2 forms, we’ve made a checklist of the most important documents you’ll need to have on hand. Keep reading to find out more!

Employment Records and Income

Your income can be confirmed in a couple of different ways, some of the easiest forms being a tax return or a W-2 form. The tax return copy will need to be two of your most recent federal and state returns. As for your employment records, these documents may vary depending on your source of income:

  • Salaried or hourly workers with a company: a W-2 form and recent payroll stubs can be submitted.
  • Self-employed and independent contractors: may use their 1099 forms and income tax statements. Lenders may also require a Social Security Number to verify employer’s name and address, hire date, and/or credit scores.

Assets

Another part of the pre-approval process is organizing your list of assets. These records can be anything from bank statements to investment accounts. The more assets you can verify, the better chance you have at qualifying for a higher mortgage loan. Your lender will want copies of additional documents such as:

  • Bank statements: a copy of statements for every account whose assets you’re using to pay off the mortgage with. Include blank pages of the statements.
  • Investment statements: copies of IRA statements and investment account information for 401(k)’s, stocks and bonds, etc. Include blank pages of statements.

Debt

Monthly debt will also be used to prove you’re making payments to your loans and other balances. Lenders will want to get a comprehensive list of your monthly debt payments and the following information along with them:

  • Auto Loans: Loan balance and proof of payments, even if it’s the minimal amount
  • Student Loans: Remaining balance with the loan company’s name and address
  • Mortgage: a copy of the most recent statement with loan balance, account number, lender’s name and address, and monthly payment
  • Credit Cards: Copy of payments to each card and remaining balance

Quick Tip: If you do not have a credit history, you can still show proof that you’re making monthly payments with paperwork showing utility bills or other regular payments.

Conclusion

Our pre-approval list features a few of the records you will need to be approved for a loan. However, further documentation may be needed to qualify. To get in touch with a professional loan officer, contact American Mortgage Resource, Inc. Our experts can walk you through the process so you know if you’re qualified for a mortgage loan. For more information, visit our website today!