Good Credit is King, When Qualifying for Mortgage Programs

If you want to purchase a new home or refinance your current mortgage, be sure to check out the wide array of loan programs available. If you have less than excellent or even poor credit, you can still qualify for a loan. If you have outstanding credit, though, you are in the proverbial driver's seat, when it comes to selecting your loan program. Be sure to find a good mortgage consultant, and carefully explain exactly what you need. Here are just a couple of "outside-the-box" programs that come in handy for some people but require excellent credit ratings.

Stated loan programs are designed for a person whose income or assets fluctuate from month to month and year to year. Not many banks offer stated programs. Many people who need stated programs get turned down by not only banks but by inexperienced mortgage brokers who don't understand the breadth of the programs at their fingertips. So, you may have to enlighten them with your own insight by telling them this is the program you need.

Stated programs are for people who may not qualify for a conventional loan, because they do not meet income requirements a lender has. A prime example is someone who does not show all of her income on a W-2 tax return, for one reason or another. This person may make enough money to cover the mortgage payment, but she can't prove she makes it on paper. Lenders like to see two years of W-2 income. This proves to them that you consistently make enough money to pay back the loan. Now, it's important to note that this is a good credit program, and a lender will want someone with at least A-minus credit for approval. Here is where all that work to maintain your spartan credit record is going to pay off.

What the stated loan requires is all standard documents, except income verification. In other words, the loan officer is going to state your income on the application, and no proof is required. Please note that this program is not intended for someone who works at McDonalds to try to state that he makes $200,000 yearly, so he can get approved for a $400,000 loan. It is intended for people, like salesmen, whose income varies or for businessmen, who work on bonuses, which they may not receive until the next year. As long as the income is reasonable for the profession, no underwriter will ever question it. So, if you needed to make 60,000 yearly for approval, but you only show $54,000 on last year's W-2, your mortgage broker can get you a stated income program, and he will simply write $60,00 on the application. Don't worry, the lender won't ask for pay stubs or tax returns. Your credit rating speaks for itself. In other words, the lender sees that you have an excellent payment history on your other debts, so he is willing to take on a bit more risk.

A stated asset program works the same way, and good credit is required for approval in this program, too. Lenders require cash reserves, in order to cover several months of mortgage payments, in the event something goes wrong after the loan closes, like you lose your job or get hurt. This can be a problem for people who have no savings, stocks, or retirement accounts, which are all acceptable forms of reserves. If you fall into this category, you simply ask for a stated asset loan, and the mortgage broker will state enough assets on your loan application to appease the lender.

This seems fraudulent, you might say. It isn't, as long as you follow the guidelines set forth by the lenders. Remember, they created these programs, so they could loan more money. You'll pay, of course, because the lender will hit you with a premium on your rate, because the loan is more of a risk. So, instead of getting a 6% rate, you might get as high as 6.75%, but at least you'll get your loan.

There are many other loan programs that allow you to borrow more of the equity in the house, let's say up to 95% or even 100%, due to a great credit rating. Some programs allow for an improvement on your interest rate.

It's always important to ask your mortgage broker if there is some kind of incentive because you have A or A+ credit. Most lenders allow the mortgage broker to either give you the break in rate, or they'll give it to the broker in a cash commission. Many unscrupulous brokers will never mention the credit bonus to you, and they'll make up to .25% of the loan amount for themselves.

So, if you had a $200,000 loan, and the lender allowed a .25% interest reduction or commission to the broker, and the broker takes it, instead of giving it to you, that mortgage broker would make $500.00 extra dollars, which would be paid by the lender. Of course, if you had received the .25% better rate, your payment would decrease by about $30.00 each month and $360.00 each year. That's nearly $2,000 if you have the loan for five years that you would lose to a greedy mortgage broker. So, always ask for something, due to your excellent credit.

And always remember, with good credit, you are king. And kings always make the rules. Learn more at www.winningthemortgagegame.com

Mark Barnes is author of the wealth-building system, Winning the Mortgage Game and other investment real estate books. He is also a suspense novelist, and his new novel, The League, will thrill both suspense and sports fans. Learn about Mark's wealth-building system and get his free home loan course at http://www.winningthemortgagegame.com. Learn more about The League and read an excerpt at http://www.sportsnovels.com

---

Avoiding ID Theft and Credit Fraud

Article excerpted from the new book, "How to Do Space... Read More

10 Step Credit Repair Guide

The process of clearing credit can be laborious and frustrating,... Read More

Credit Damage: Getting Compensated for Your Loss

Until recently lawyers for victims of credit damage had little... Read More

4 Steps You Can Take If Your Online Credit Card Application Has Been Refused

Help! I've Been Turned DownYou received an envelope in the... Read More

Is Plastic Making You Happier?

If you're like most people, you probably own at least... Read More

Identity Theft : They Got Him

His hard earned money? Gone. Creditors on his back everyday.... Read More

Check Your Credit Before Shopping For That Home Loan

Review Your Credit Score.Nearly every bank, credit union, and mortgage... Read More

Will Inquiries Lower Your Credit Score?

What are inquiries?When you apply for credit the creditor or... Read More

10 Simple Steps to Manage Your Credit

By far the greatest invention the banks have ever come... Read More

Beware of Falling Minimum Payments

If you opened a credit card statement recently and were... Read More

Using Credit Cards Wisely

"I think money was stolen from my card" or "I... Read More

Give Yourself Credit

The Beginning of the Credit Card EraIn 1951, Diners Club... Read More

What Is the Fair Credit Reporting Act and What You Should Know About It

The Fair Credit Reporting Act (FCRA) and the recent update... Read More

Getting Your Credit Report and Understanding Whats On It

If you intend to apply for a loan, you need... Read More

Credit Repair Myths and Facts

There are no secrets to repairing your credit. Many shady... Read More

Simple Identity Theft Protection

How many of you bank, shop, or transact other business... Read More

All You Wanted to Know of Bad Credit

Martin Henderson is in a fix these days. Because of... Read More

Identity Theft Exploding: Here?s How You Can Avoid Becoming A Victim

Americans are more concerned about identity theft than unemployment or... Read More

Credit Reports ? Why Your Credit Score is Important

If you have never heard of a FICO score before,... Read More

7 Surefire Ways To Repair Bad Credit

Do you have a poor credit rating? If so, you... Read More

Credit Counseling: Is it Really Necessary?

Not everyone has a positive experience with credit counseling. Potential... Read More

Identity Theft - How to Protect Yourself

"Like the tan? I got tons of sun on that... Read More

Negotiating Rates with Your Credit Card Company

Ok, let's face it, everybody hates high credit card rates,... Read More

Credit Scores and Loan Applications

Keep Your Credit History Clean - Remove A Negative Credit... Read More

How To Use Your Credit Cards Wisely

Are you one of the thousands pulling your hair out... Read More

Applying for Credit Cards Online

In the olden days, about 10 years ago, before the... Read More

5 Ways To Prevent Credit Card Late Fees

Paying a credit card late fee is the same as... Read More

Lower Your Credit Card Interest Rate Now!

With today's credit card companies, there are many opportunities to... Read More

Can You Acquire Good Credit Overnight? You Bet

Your credit file may not reflect all your credit accounts.... Read More

Good Credit is King, When Qualifying for Mortgage Programs

If you want to purchase a new home or refinance... Read More

Balance Transfers Can Help You Stop Putting Money Down The Drain!

As you probably know, interest rates are at all time... Read More

Save Money and Lower your Payments by Improving or Repairing Your Credit

Having a better credit score not only represents easier access... Read More

Debit Card vs. Credit Card, What Are The Differences ?

Ah, the "good old days". If you are a baby... Read More