The Homeowner Affordability and Stability Plan recently initiated under the Obama administration will provide millions of people with the opportunity to obtain financing which will allow them to keep their homes. For people currently behind on their mortgage payments, there are provisions in the plan that are designed to help many who are already in or potentially face the threat of foreclosure. However, just applying for a special home loan program doesn’t necessarily mean you’ll automatically be approved.

Whether or not you’re actually eligible for this particular loan, there are some things you should try to avoid to help improve your chances of being approved for the mortgage you want. Pay attention to these 5 deadly credit mistakes that could cost you that approval:

1. Running up credit card balances

By running up a balance on your credit card(s), you’re unfavorably swinging one of the key credit score indicators – the debt-to-income ratio. Lenders would prefer to see you make a lot more money than you currently have in debt, and the greater the difference, the happier they are. To score well in this department, pay down any existing balances as much as possible, and avoid large purchases before you get your loan.

2. Financing major purchases before applying for a home loan

Countless people inevitably ‘kill the deal’ by purchasing a car or taking out a big loan from a finance company or their credit union right before they apply for a home loan. Similar to running up credit card debt, this additional debt can make the difference between getting approved or denied. If at all possible, wait until after your home loan has funded before financing other purchases. Believe it or not, many lenders will run your credit again even after they have approved your loan to find out if you have since applied for more credit. If you are purchasing a home, you will want to wait until the day that your loan has actually closed. If you are refinancing a primary residence, there is a 3-day rescission (cancellation) period, even after you have signed the loan papers before your loan has funded.

3. Putting it off until the last minute

Many homeowners with an adjustable rate mortgage start to inquire about refinancing only 2 to 3 months before their initial rate expires, but by then it’s often too late. Because the criteria to qualify for all types of mortgages have become more strict; if you have a loan with a high interest rate or payments that are scheduled to reset in the next 1-3 years, you’ll want to start getting prepared now. Unfortunately, many people who have had their homes foreclosed on or are now facing foreclosure could have qualified for a more stable and affordable loan program had they taken the time to get better prepared ahead of time.

4. Paying off old collections and charge offs

Many people who have re-established their credit often have some old bad debt (2-5 years old or more) that still shows up on their credit report. In most cases, paying off an old bad debt is a bad idea. It causes the account to reset and become current which more adversely affects your credit score. For homeowners who obtained a subprime loan, you’ll want to learn how to effectively manage your credit well in advance of applying for a home loan to qualify for financing. If you’re looking to purchase a home in the future, start educating yourself about what is required to obtain financing at least a year before you need a loan.

5. Signing up with credit counseling agencies

Lenders see ‘credit counseling’ as a red flag. To them, it means someone who doesn’t know how to manage their own finances, even if you learned from the counseling and are on the right track now. Credit counselors will usually have good advice for getting out of debt, but the actions they recommend won’t reflect as nicely on your credit score. Typically, closing healthy credit accounts is a top recommendation – which is great for limiting your debt – but looks fishy on your credit report.

To qualify for a certain type of home loan under the Homeowner Stability Initiative, you might have to sign up for HUD-certified debt counseling program, but otherwise you should stay away from credit counseling before applying for a home loan. If you really have a spending problem, a better strategy is to put your credit cards where they aren’t easily accessible to you (like a safe deposit box), or even cut them up. Keep the accounts open, and continue to pay down your balances and make your payments on time.

Understanding the home financing process and how to manage your credit well before obtaining a mortgage will ensure you get the best and safest terms as well as avoid the common mistakes that can cause your loan to be denied.

Modifying a mortgage loan has become much easier since the implementation of the Obama administration’s loan modification plan. This plan provides incentives to lenders to change the terms of an existing loan to make payments on Columbus houses more affordable to homeowners. In the past, getting a mortgage modification was far more difficult, since lenders had to bear certain costs of the process.

Determining if you qualify for the loan modification plan

In order for you to qualify for the loan modification there are certain criteria that you must meet. Firstly, qualifying Columbus houses must be your main residence and you need to have bought it prior to 2009. Depending on the area in which you live the loan you apply for cannot be more than $730,000. If the house is located in a more high cost area then the loan limit might be somewhat higher than the aforementioned amount.

You need to bear in mind that the modification is not available on second mortgages – only on the first one. Of your monthly income at least 31% must go toward the mortgage or you will not qualify for the modification. And, as unpleasant as it may be, you will be required to demonstrate that you are currently experiencing financial difficulties that are creating problems when your mortgage payments are due. It does not matter if these problems have arisen because of a job loss or some other reason. The issue is that you will need to share this info.

After qualification comes the process

The first step in the process is to contact your lender. Under the Obama plan, a lender is not required to modify your loan, but participating lenders are more likely to work with you because of the financial incentives the plan offers.

Your next step is to get all the necessary paperwork in order. You will need to be able to provide evidence of your monthly income before tax,k the last tax return that you filed, if you have savings and/or assets then you are required to provide relevant info about them. You will also need to provide statements for the mortgage and loan and this includes your second mortgage if you have one, or else the home equity line of credit. To help make the process easier draw up a budget. Make sure that your monthly expenses, which includes your credit card and loan installments, whether it be a student loan, or something else.

It is only once you have assembled the required documentation that you would then move on to the final stage, which is negotiating the terms and ensuring that all the relevant documents have been correctly completed.

Why modification instead refinancing is the better choice

So why bother to modify your loan instead of pursuing a refinance? The two main reasons are cost, and the ability to qualify. In most cases, you’ll need excellent credit in order to qualify for a refinance in the current credit climate. If you’re in danger of falling behind on your mortgage, chances are you have less than spotless credit. There are also no fees associated with a mortgage modification under the Obama plan, and if you are in arrears, late fees and penalties can be waived. With a refinance, you will be responsible for closing costs and other fees.

While on the subject of arrears a loan modification is a perfect solution. Of course, refinancing still has its own perks. For one thing, if you have equity in the home and you are after a better interest rate then refinancing is the answer. And it is irrelevant whether or not you qualified for the Obama plan. Also, should you need to access cash in your home’s equity refinancing makes that possible.

If you want to save between eight hundred and two thousand dollars then you will need to negotiate the modification instead of having a service provider or lawyer do it on your behalf. It is easy for you to do it because of the incentives available to lenders. As long as you can offer relevant assurance of timely payments each month you should not encounter any problems.

Having bad credit can be a real burden in getting mortgages and loans. You pay higher interest rates and higher fees and you have fewer options to choose from when looking at a mortgage or a loan.

But despite a bad credit score, you can still get a mortgage or a mortgage refinance. It might cost a little bit more, and it will take some more preparation, but it can be done. You should think about consulting with a mortgage broker that specializes in bad credit cases.

You’re entitled to a free copy of your credit report every year. There is a lot of information on the Internet and other places about improving your credit score. Don’t think that just because something shows up on your credit report, you can’t change anything about it. If someone has made a mistake, contact the organisation or company and dispute the credit record. This may result in an improved credit score.

If you succeed in getting your credit score improved, you will get more options and a lower interest rate on your refinance.

Seek out an expert when trying to do a refinance with bad credit. If you seek the help of a mortgage advisor specializing in bad credit, be honest. If you don’t give all the relevant information, or you hold information back, you make it very difficult for a mortgage advisor to help you. You may even get the wrong advice because of a lack of information.

Because of the currently low interest rates, a mortgage refinance can be a good choice. However, because of the mortgage meltdowns recently, banks and lenders have pretty strict lending criteria, so it’s not as easy as it used to be to get accepted.

If you take the trouble to prepare, you increase your chances of acceptance by a lender. In this article we will go over a few things you need to know before sending in your application for a refinance.

Home prices are getting lower by the day. This, coupled with the increase in inventory on the housing market, lowers the amount of equity you have in your house. If you currently owe more than your home is worth, getting a mortgage refinance won’t be easy. When an appraiser comes by, he will always make an appraisal of the value in today’s housing market, not the housing market as it used to be.

The government recently announced plans for helping homeowners that are in a negative equity situation. Exact details of these plans have not yet been unveiled, but will be available shortly.

Every bank also looks at the amount of money you make. They want to know if you have sufficient income to pay the bills every month. If you can’t show you have sufficient income to do a refinance, you will have massive trouble to get accepted for a mortgage refinance. There are a lot of places on the Internet where you can check out what you approximately can get when applying for a mortgage. Make sure you have sufficient income before going through the trouble of applying for a mortgage refinance.

Also, look at your current credit score. Your credit score will play a big part in the conditions of the mortgage. If you can improve your credit score in any way, do it. It will save you a lot of money in the long run.

When you’re thinking about a refinance, always look at the sum total of this decision. In other words, is a refinance worth it? There are added costs when you do a mortgage refinance and it would be a waste to incur these extra costs when you’re planning on leaving in a few years or when you’re unable to recoup your costs.

Many people are considering a mortgage refinance because of low interest rates. A mortgage refinance can have many advantages, especially when you’re trying to improve your cash flow.

If you have high interest debt, like credit card debt for example, you should consider a mortgage refinance. The interest rates on a mortgage, even if it’s a second mortgage, are always lower than credit card interest rates. The added costs of interest on credit card debt can cripple you and make it very hard to ever pay the entire debt back. With a mortgage refinance, you can end this vicious cycle.

Mortgage refinancing can also be a good idea when you need extra cash for whatever purpose. If you currently have equity in your home, a mortgage refinance can give you possibilities to trade this equity for cash. The freed up cash can be used for any purpose you want.

If you want to drastically lower your monthly costs, consider rolling up your current debt into a mortgage refinance. You will incur some extra costs when doing a mortgage refinance, but many times it’s worth it. This gives you the possibility to finally start chipping away at your debt. It also gives you more financial breathing room.

If you currently have a financial advisor, ask him or her to draw you a picture of the mortgage refinance process. This way, you’ll know what costs you will be looking at and if it’s worth the trouble or not. Also, if you’re currently a senior, you may consider a reverse mortgage instead of a mortgage refinance. This mortgage form can give you added financial room in your retirement, without monthly costs.

It’s possible to handle your mortgage loan modification process yourself. If you decide to take on this job, it’s important to know what to do. Even more important is knowing what NOT to do! In this article, we’ll take a look at a few mistakes to avoid when turning in your mortgage loan modification application.

Mistake: Trying to negotiate with the wrong person. You may get called at home by someone from the collections department about your unpaid mortgage bills. Don’t bother trying to talk with them about mortgage loan modification. These people are unable to help you and are just calling to get the money. You’re better off contacting the correct department of your lender, so you can speak with someone that can actually help you out.

Mistake: Not doing proper preparation for a mortgage loan modification. If you don’t take to study the mortgage modification process, save yourself the hassle of sending in the paperwork. There’s an enormous chance you’ll get declined, because you haven’t prepared properly. Reading this article on this site is a good starting point.

Mistake: Omitting information when applying for mortgage loan modification. Be aware of the fact that the bank WILL check up on the facts you provide, so don’t be tempted to omit information or even lie. You will get caught and all your chances of getting a mortgage loan modification will go down the drain. Banks really don’t like it when you don’t tell the whole truth.

Mistake: Paying a mortgage loan modification a big upfront fee. There are a lot of mortgage loan modification companies springing up left and right because of the high number of foreclosures. They all want to get a piece of the pie. Be sure you check their credentials and know that you’re dealing with an ethical, reputable company before giving them your money. The objective is to get out of the hole, not deeper in it.

Mistake: Proposing a loan workout that does not meet the approval criteria of your lender. If you do this, the lender will conclude that you have not taken the time to do your homework. As a result, your application will be denied. Always read up on the approval criteria to give yourself the greatest chance of being accepted.

If you make sure you don’t make these mistakes when applying for a mortgage loan modification, you give yourself the greatest chance of succeeding. The final decision is up to your lender, but if you take the time to do this right, you make it easy for the lender.

When considering loan modification, watch out for the many scammers in the loan modification market. Because of the foreclosure boom, vultures are attracted to this industry, so not everyone that says they can help you out, will help you out.

So… how can you tell if your loan modification is legit? You have to know if you are being scammed. In this article, we will look at a few tips to detect a scam.

First alarm bell: when a loan modification person asks you to pay him an upfront sum of a couple thousand dollars, don’t walk away. Run away. The fees of a loan modification get rolled up in the loan amount and are paid out of the proceeds of the improved mortgage terms. In other words, the loan modification process is paid by the bank. Remember that the goal of a loan modification is to improve your financial position, not make it worse.

When you start on the path of loan modification, it’s always a good idea to approach your current lender. When you do this in time, before debt is piling up, your current lender is glad to help you out. Your current lender knows your history and knows about your situation , so they may be best suited to help you.

Be sure to go up the chain of command when you call your lender. Many times, you’ll encounter a helpful customer service person, but unfortunately, they can’t help you. You’ll have to insist on speaking to someone that can negotiate for you in these situations.

If you feel you’re out of options, consider filing Chapter 13 bankruptcy. This last resort measure forces a lender to look at mortgage loan modification. It allows you to come up with a payment plan for the past payments As said, this is a last resort measure, so be sure to look at other options first.

Mortgage Refinance has created a surge in the financial lending sector, creating a somewhat unexpected but welcome spike in business during the lending’s struggling economic times. Rates have dropped below 6% as soon as the Federal Reserve mentioned they were going to buy mortgage-backed securities to stimulate consumer financing once again. The dramatic drop in mortgage rates has had a direct influence over mortgage finance and has proven some lenders under-prepared.

The purchase of mortgage-backed securities has started taking place as of the second week in January of 2009. This has spurred a wave of activity for the mortgage finance business, also adding to the workload lenders are currently experiencing after the Fed’s announcement in November of 2008.

Some contacting lenders for mortgage refinance have been unsuccessful in speaking to anyone directly. And with some left only with the option of leaving a message for a return call, this has frustrated consumers even more as they are unable to simply leave a message as lender mailboxes and voicemail are unable to support the volume of callers.

The sudden drop in rates is proof enough the mortgage finance surge has found lenders under-prepared during a time when they could really maximize on the opportunity to make up for the lull in previous months. With unexpected delays in applications following up with prospective customers, understaffed lenders scurry to service consumer requests for mortgage refinance.

To make up for a shortage in staff, people from other departments experienced in finance within the lending institutions have been transplanted to handle the increase in mortgage refinance. The possibility of rates going back up has created a sense of urgency and worry. As we know the history of fluctuating rates, it is possible to see change from hour to hour.

If there are contacts directly related to the lending industry or connections with a real estate agent that can act as a liaison to help deal with a mortgage refinance, this will offer a stronger start. There is also the possibility some lenders may not have the time reply to the message or to an online application before some are able to lock in a great rate.

When a prospective customer is told to apply on the Web after finally getting through to a live person, it becomes obvious it is time to be a little more aggressive in approach. For those consumers that do manage to reach a lender it would be wise to know the most recent rate available. Some online lending sites have not posted the best rates for fear of being bound by them.

Any connections directly related to the lending industry or connections with a real estate agent that can act as a liaison to help deal with a mortgage refinance will help greatly. There is a strong possibility some lenders may not reply to the message or to an online application. With business presently looking up for lenders, it would be smart to secure that magic number by not waiting around for the lender to respond.

Knowing whether a remortgage is the right move for you can be a difficult thing to determine. Sometimes, remortgaging is not going to be the best move, while other times it is going to be the only thing that saves your house during a tough economic patch. Answer these 10 questions honestly to find out whether remortgaging is the right move for you now.

1. How does my credit look? Knowing whether or not your credit is good is going to tell you a lot about your future interest rate if you do decide to remortgage. When your credit has seen better days, you may want to work on that before working on remortgaging.

2. What is your current rate of interest on your mortgage? If you’re only going to save a half a percent or even a percent, you might want to consider holding off on remortgaging. You want to make it worth your while, and you also want to make sure you get the best deal possible. By holding off a bit you can see if mortgage rates go down even further.

3. What’s the current rate of interest that banks are offering? There’s a current rate of interest that’s pretty much standard with all remortgage companies, so you are going to want to find out what that is and figure out how much money a remortgage could save you every month in your bills.

4. What are the fees associated with remortgaging? Every company is going to have different fees for remortgaging, and you want to choose a company with the lowest fees. However, sometimes the fees can be hidden so make sure to read the contract thoroughly.

5. How much longer is your mortgage? If there isn’t much time on your current mortgage, it might be best if you just worked on paying it off as quickly as possible. You will need to weigh the benefits paying off your home quickly or getting a better interest rate. Remortgaging is not usually going to speed up paying off your house, just make it less expensive.

6. Are you planning on relocating? If your job is going to send you to another location soon, remortgaging is not going to be the best move right now. Just keep on paying off your mortgage and when you move, you can find a mortgage that has a better interest rate.

7. Is the family happy? If you are going to get a divorce (or get married) in the near future, you are going to want to wait to remortgage your house. Remortgaging is expensive and not a fun thing to do, so you don’t want to do it more often than you have to. Do it only when you have to.

8. Have you been thinking about remortgaging for very long? A lot of people see commercials on television and think, “Oh remortgaging is for me,” not realizing how much work it actually is.

9. Do you have the time to remortgage? Remortgaging is going to be a major hassle, and it is going to take a lot of time. If you don’t have the time right now to remortgage, consider waiting until you do have the time so it doesn’t stress you out to much.

10. What do the banks say? There is usually no obligation in going and talking to banks, so you might want to see whether or not testing the water and talking to a couple of banks is going to benefit you. You may decide after talking to a couple of banks that remortgaging is not for you and that is totally fine.

Remortgaging is going to be a hassle to do, and what is even more confusing is that it isn’t always crystal clear when you should and shouldn’t go through this headache. After you ask yourself all of these 10 questions, you should be able to see whether remortgaging is a smart move.

It wasn’t all too long back when you couldn’t find a mortgage broker or banker wanted to do a FHA insured mortgage. It was Conventional or bust.

For all practical purposes it was logical. Conventional mortgages are far easier to process due to less demanding underwriting procedures.

I mean heck, FHA required the appraiser to actually go in the home. What? Forget that, “I wanna drive-by. Or better yet, no appraisal at all.” I say that as I steeple my fingers.

The perception of the government insured mortgage was one of for first timers with poor credit and little down payment.

The benefit of the program was interest rates were roughly the same as the conventional products.

This financial mess we’re in started in the ’90s. I can remember lenders relaxing conventional underwriting requirements. It go to the point when the lowest down or zero down conventional loan was the way to go.

If the lenders could only take the last 10 years back…. I think they might.

Well, the rest as they say, is history. The ramifications will be felt for the next decade. Currently conventional zero down financing is gone, sub-prime is history, and sub-A products are on the rocks.

What does that leave the consumer. It leaves them one hell of a product in an FHA mortgage to purchase a screaming deal (there might be few of them coming up soon) or to refinance out of a sub-prime.

So, why go FHA. Well, to begin you don’t need a big down payment. Many people don’t have that now. The typical FHA mortgage requires 3% down payment.

And credit is based on payment history rather than scoring.

The light credit requirements are of great help to those with lack of credit or others who hit a rough spot and are in the credit rebuilding process.

A ton of folks have had their credit scores pummeled over the last 24 months.

What I’m getting at here is the government loan is a make sense option when conventional loans are hiding under a proverbial rock.

The government loans keep chugging along and offer a great benefit.