Kris Mathews asked:




If you are self-employed or work as a contractor then you probably know how difficult it can be to get mortgage loans approved. For people who are self-employed, it is often very difficult to get the necessary paperwork together to prove their income. Because of this many people good borrowers don’t get the loans that they are qualified for. To solve this problem many lenders offer no documentation mortgages, or no doc mortgages, which are loans that allow you to state your income in the application process.

Because borrowers can state their income when it comes to income section of the loan application, many lenders will often require the borrower to have a good credit rating when assessing their loan viability. No longer is it possible for someone with a bad credit rating to get a low doc loan approved without have a significant down payment for the loan. Lenders look at the borrower’s credit rating to ensure that they are likely to repay the loan.

Another important aspect that lenders consider when approving no doc mortgages are the borrower’s debt to income ratio. The debt to income ratio helps determine whether or not the borrower is able to repay the loan. If you have a high debt to income ratio then it means that you have over leveraged yourself financially. Lenders want to see a ratio that is below 45% when considering the borrowers application. You should also be aware that these loans will offer slightly higher interest rates than traditional home mortgage loans.

Rita

Liz Moir asked:




The news about the home loans industry in the recession varied all the time.

The original news at the beginning of the credit crunch was accurate when it was reported that these three home loan products were very much in the decline

The reason for that of course was obvious, as apart from people being unsure of their financial futures, the underwriting of lenders became so restricted that even those who wanted a mortgage, remortgage or secured loan were unable to obtain them.

Before the recession the criteria for these three products was very relaxed, and a great many people were eligible to apply for and be granted these loans.

Mortgages and remortgages were available up to 100% of the value of the property, and the Northern Rock advanced at up to 125% LTV.

These 125% plans were supposed to comprise of a 100% mortgage and a personal loan for the rest. However this was not the case, as the sum granted over this was secured on the property and added to the total borrowings of the applicant.

At that point self declarations of income were available for the self employed which meant that the applicants for remortgages, mortgages and secured loans simply declared their own earnings on a business letter head or on a plain sheet of paper accompanied by a business card.

Secured loans were extremely popular, with 100% LTV plans right up to 125% LTV available from a number of lenders.

Therefore it was apparent that the acceptances of applicants for these three loans declined as self declarations were totally abolished for mortgages and remortgages and equity margins were greatly reduced to a maximum of 85% with most mortgage lenders, while a few were prepared to lend up to to 90%.

Secured loans are now advanced at 75% for the self employed and 85% for those in employment.

One lender is prepared to accept self declarations for secured loans at 50% LTV.

The reason for applications declining is therefore obvious, but what is not so easy to understand is that from 2007 until the end of the recession in 2010, reports in the press and on television abounded with contradictory reports, stating one day that remortgages and mortgages were declining, and then not long after we were told by the same sources that they were very much on the up with more people applying.

Now in October, months after the recession, the same thing seems to be happening with reports that the home loans industry is showing great signs of improvement, to be told days later that mortgages were again in decline as the house prices slump again.

The applications for remortgages have not been as low for ten years.

It is to be wondered if there have been any improvements to home loans since the recession ended.

Arthur

Adam Quasde asked:


If you have mortgages and loans you want to keep track it is advisable to calculate it. There are a few ways to do that. Two of these are through the spreadsheet application and the other through the use of loan calculators.

To calculate mortgage loan payments, you have to have the following:

Amount Interest Rate Payment Period

These are the basic needs in computing for your mortgage loan payments. There may be a few additions especially for the online loan calculators so it’s best that you have those as well.

In using spreadsheet application (Microsoft Excel in windows), you make use of the PMT and IPMT functions. The figures that you need to enter here are:

Rate – or the interest rate you have for the loan Per – the period of the payment being computed Nper – number of payment or the terms Pv – the total amount of the series of future payments is worth Fv – the cash value attained after the payment Type – Logical value. 1 = payment at the beginning of the period or 0 = omitted

In using the loan calculators, what you need are the three (3) items stated above. All you have to do is to enter the values and it will do the computing for you. There are other loan calculators that ask for other information such as location this is because there are some states that have additional costs to be added to your loan. Another feature in online loan calculators is the table of payments in breakdown.

This article is all about how to calculate your mortgage payments.



Andrea