�We have researched and listed some of our most recommended debt consoldators online.� This is not a guarantee, but based on our research and their popularity among borrowers

Contrary to what you might have heard, buying a home after a foreclosure is possible.� However, homebuyers should not apply for a mortgage without doing their homework first. Since the forclosure is damaging to your credit, many lenders are likely to take advantage of you. Of course, your options are limited. Nevertheless, this does not mean you have to accept any offer given to you, no matter how terrible.

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Why Foreclosures Occur?

When a homeowner has a mortgage they are unable to repay it will eventually get foreclosed.� Mortgage payments generally have to be at least three months behind before a lender begins the foreclosure process. If the homeowner is able to acquire funds and begins to pay the monthly payments, the lender will stop foreclosure.

Factors That Contribute to Foreclosure

Of course, there are many factors that can contribute to a homeowner’s inability to repay a mortgage loan. For starters, if the homeowner is living beyond one’s means this will make it harder to maintain the regular monthly payments.� Secondly, many people fall in love with a home they simply cannot afford. In this case,they have a monthly income that is really below what they should have for their particular home. Many homeowners do not take into consideration all of the other expenses associated with owning ahome, i.e., utilities, yard upkeep, and maintinance.� Often times these other expenses will lead to excessive credit card debt and consequently less income left over to pay that mortgage payment.

Some Negatives of Buying a Home after Foreclosure.

In general, most lenders will not approve a mortgage loan immediately following a bankruptcy.� In their mind, you are a high risk applicant. This stands to reason–if you were not able to make regular payments on your last mortgage, they figure that the odds of your defaulting in the future are probably high.� Lenders do, however, understand that circumstances change for the better.� For example, if the foreclosure was due to a loss of employment or illness, you may be in a better position to qualify for the mortgage after six months.� Still, there are negatives of buying a home soon after foreclosure.

High Mortgage Rates

The interest rate following a foreclosure can be outrageous.� As a homebuyer with a recent foreclosure, you are considered high risk. Therefore, most traditional mortgage companies will not approve your loan.� The companies that do will often charge you interest rates of 3 or 4 percentage points above traditional rates.� This will often increase mortgage payments by a few hundred dollars.

Things to Remember when Purchasing a Home after Foreclosure

Remember to be patient when looking to buy a home relativley shortly after a foreclosure, rebuilding your credit is key. During the first 24 months, attempt to open new credit accounts and maintain regular payments.� Be sure to pay all creditors on time and avoid missing any payments.� Take your time and shop around for a new mortgage. Prior to accepting the mortgage offer, be sure and contact many lenders for quotes. If you shop online, you will be able to obtain many quotes from several lenders in minutes.

Read Reviews of Home Warranty Companies - Search online until you find comments by users who have used the different home warranty companies that you are considering working with. Find out how the company handles their claims? How is their customer service? How is their coverage?

There are many different websites that allow comments and reviews from users. There are also paid membership websites that closely monitor and manage the review process. Places like Angie’s List have a carefully managed review posting process so that you can be sure that the reviews that are posted are honest and accurate.

Sometimes reviews online can be manipulated by the company being reviewed. Also, angry customers will sometimes post multiple reviews, which can unnecessarily cast the company in an overly negative light.

Checking online reviews are one of the most important things you can do before you decide which home warranty company to go with. People who have bad experiences with an insurance company are usually vocal about their experiences and it’s easy to find those reviews online.

Save yourself time and money and headaches by reading many reviews online before you make a commitment.

Check With The BBB - Always make sure you check with the Better Business Bureau before you decide on which home warranty company to do business with. This is a good way to find out about records of fraudulent activity with any business. This is an important thing to check before you do business with any company that is based on the internet.

Compare Coverage - When comparing companies, compare what services they offer coverage for. Decide what electrical or structural items in your house you are the most concerned about getting coverage for and compare pricing on coverage for those items.

Consider a Plan That Covers One Kind of Product - Many home warranty companies offer plans specific to certain types of appliances or electrical systems in the home.

For example, some companies offer coverage of the kitchen and laundry appliances as one plan. For example, the dishwasher, range/oven, refrigerator and washer and dryer would be covered under that plan.

Maybe with your current living situation, those are the only appliances in your home that you are concerned about getting coverage for. You don’t want to pay for a bigger plan than you need.

Some plans cover only major systems, like, central air, heating systems, plumbing systems, duct work, exhaust fans, water heaters and more.

Watch Out For Pre-Existing Conditions - Many people end up dissatisfied with their home warranty coverage when they go to make a claim and find out that they item they want to make a claim for isn’t covered because of a pre-existing condition. Find out what the stipulations are with each company in regards to pre-existing conditions.

Compare Prices, Of Course - Most people want the cheapest home warranty coverage they can get. But, more important than just getting the cheapest coverage is making sure that you are getting value for your money. Even if you have the cheapest coverage, if the company won’t honor your claims, then you are throwing all of your money away. When looking for the lowest cost companies, make sure you are keeping in mind what those prices cover.

Here are some things you can look for when you shop for a new mortgage loan on the internet:

1. Compare Rates - Before you do anything, compare rates and make sure the you know what kind of rate you should be able to qualify. If you go through a broker you may end up paying more than you would if you went directly through the lender.

2. Get a Quote in Writing and Make Them Stick To It - When you do finally get a quote in writing from the representative that you talk to, make it clear that you do not have any room to budge on those numbers. Make it clear that you will walk away from the loan if those numbers change anytime before closing.

Read Reviews Online - Look through financial related forums and see what others have to say about the lenders that advertise online. See if they had any surprise negative experiences at their loan closing.

Get Competing Quotes - A great way to save time is to take advantage of a mortgage service where you can obtain competing mortgage quotes from one form. Sometimes just filling out the forms online can be very time consuming. Mortgage applications can sometimes be very lengthy. Starting with some competing quotes can at least give you a good idea of what kind of loan you can expect to quality for.

Make sure you shop around with at least 3-5 different lenders before you decide on who to work with. Although you can always refinance. It is very expensive and you don’t want to increase the size of your mortgage because of poor choice of lender.

In order to buy a home today, it’s important to have a down payment.

FHA Loans - If you opt for an FHA loan you can buy a home with as little as a 3% down payment. One of the drawbacks to FHA loans is that they have limits. You must buy a home that is lower than the FHA limit. A benefit to buying a home with an FHA loan is that refinances are SO easy. To refinance your FHA loan, all you have to do is find someone who does FHA streamline refinance loans. They can refinance your loan without an appraisal and without any current proof of income. They only need your current mortgage and home information and you can refinance at the lowest rates available. They will need to pull your credit report, though.

10% - 20% Down - There are other loans available that will require at least 10% down. They will also require full documentation. You will need all income and employment information. These conventional loans are not guaranteed by the government so they are more risky for lenders to undertake. That translates into higher interest rates and a more rigorous application and approval process for the borrower.

The more money you are able to put down, the easier it will be for you to get approved for your home in 2009 or 2010. Focus on saving your money and improving your credit score the best you can. Both of these factors will make the process a lot easier for you.

Look For Builder’s Special Deals on Mortgages - Some builders offer special interest rates or loan discounts with the homes that they sell. You might want to look at their special offers. They might be able to help you get a lower rate than you would going through your own mortgage broker.

Debt consolidation can be very risky business.� There are many so-called debt consolidators that can end up making your financial situation much worse than it already is.� It’s important to choose a debt consolidation company that is reputable.

We have researched and listed some of our most recommended debt consoldators online.� This is not a guarantee, but based on our research and their popularity among borrowers.

FHA and VA Mortgage Insurance�

That is not to say that FHA (Federal Housing Administration) loans are exempt from mortgage insurance premiums–quite the opposite. The typical upfront mortgage insurance premium on an FHA loan is 2.25% but can be reduced to 1.75% if the borrower completes a course on home ownership. With VA (Veteran Administration) loans, the VA assumes the risk of default on the loan and these loans are therefore exempt from Private Mortgage Insurance. With almost all other loans, however, the lender insists on being protected in the event that the borrower defaults on their mortgage.

20% Down Payment�

Loans where the borrower pay 20% or more of the sales price of a home as a down payment are considered very low risk. Anything above an 80% LTV (Loan-to-Value) ratio is considered to be a higher risk because 1) there is less equity in the home and 2) the borrower has less to lose if the house goes into foreclosure. Typical conforming loans will require only 5% as a down payment (which translates into a 95% LTV). However, the higher the LTV, the higher the private mortgage insurance rate. In other words, as the risk increases from the lender�s point of view, the more they require the borrower to pay to ensure the loan does not go into default. This is not to be confused with homeowner�s insurance, which is required with virtually every mortgage. Private mortgage insurance protects the lender, while homeowner�s insurance protects the borrower (and inadvertently, the lender if their collateral is destroyed).

Loan To Value Ratio Determines the Rate of Insurance

Monthly mortgage insurance can vary greatly, and is mainly dependent on the LTV. 80% requires no mortgage insurance, 85% requires a higher rate of insurance, etc. Programs that offer 100% financing in a single loan carry the highest insurance premiums, and FHA loans and Adjustable Rate Mortgages require higher rates of insurance than conventional, conforming, fixed-rate mortgages. Also, the more money you borrow, the higher the rate of your PMI, as the default on a large loan will affect your lender much more than a smaller loan would.

Watch Your Equity To Drop Your PMI

If your LTV is 90% (you put down 10%), your PMI will cost about $43 per month for every $100,000 you borrow. If the lender pays the PMI for you, that PMI is tax deductible. Also, keep an eye on the property values in your area and compare that to your loan balance. Once you have 20% equity in your home, you can drop the Private Mortgage Insurance. Not only that, as of 1999, lenders are legally required to eliminate your PMI once you have reached 22% equity.

Subprime Mortgage Loans and PMI�

You may be saying to yourself, �I have a mortgage with less than 20% equity and no one has mentioned anything to me about mortgage insurance�. If your loan was originated with a subprime lender, you are not required to pay private mortgage insurance; directly, that is. Subprime lenders have their own way of making up for not requiring you to pay PMI–they increase your interest rate. As your LTV rises above 80%, so does your interest rate.

“Piggyback Loans”�

An increasing popular way to avoid that pesky Private Mortgage Insurance is to structure your loan into a first and a second mortgage. This loans are called �piggyback loans�. Say you are only able to put 5% down and qualify for a conforming loan. If the sales price was $180,000 and your loan amount was $171,000, your monthly PMI payment would be $95.48. That�s almost $100! Your loan officer or lender would probably compare that total monthly payment with an �80 - 15� mortgage. That means you would take out two mortgages simultaneously; a first mortgage of $144,000 (80% of the sales price) and a second mortgage of $27,000, the combination totaling $171,000. The interest rate on your first mortgage would remain the same as it was with the 95% LTV loan of $171,000, but you wouldn�t have to pay the $95.48 in monthly PMI. The interest rate on the second mortgage would be higher, but it would be cheaper than paying the high PMI rate.

Lender Paid Mortgage Insurance�

Another way of sidestepping PMI is to have the lender pay for it. This is called LPMI (Lender Paid Mortgage Insurance). With LPMI, the lender will agree to pay the mortgage insurance that you would normally have to pay in exchange for a slightly higher rate. A typical charge would be an additional 0.5% to your interest rate for LTV�s between 80% and 90% and an additional 0.75% for an LTV above 90%. Many lenders will pitch the higher rate and they will remind you that the interest is tax deductible, while the PMI is not. However, you are stuck with the higher rate for the life of the loan, whereas the mortgage insurance can be terminated once you reach 20% equity.

PMI Options�

Ask your broker to compare the following scenarios regarding PMI: 1) paying one loan with monthly PMI that you pay separately; 2) having the lender pay the mortgage insurance (LPMI) in exchange for a higher interest rate; and 3) structuring the loan as a combo piggyback loan with a simultaneous first and second mortgage. The best deal could depend on your PMI rate, amount of money you�re putting out as a down payment, how long you plan on keeping your home or mortgage and even the rates your brokers� lenders can offer. Not only will you be able to make a sound decision, but you�re much more likely to be taken seriously as a well-informed borrower and be given the best deal.

Bi-Weekly Payment Plans Mean More Money Paid to Your Principle Each Year�

Think about it this way: there are 12 months in a year and if you make two half payments every week, you would be making a total of 24 payments during the course of the year. There are also 52 weeks in a year, and if you made a �half-monthly� payment every two weeks, you would be making a total of 26 payments during that year. Assume your monthly principal and interest mortgage payment is $1,000 a month. Normally, you would pay $12,000 a year, right? In a bi-weekly payment plan, you are effectively making two extra �half-payments� a year (26 minus 24), which is equal to one full monthly payment per year and you would be paying a total of $13,000 instead of $12,000 over the course of the year. If you make sure that your extra payment is going towards paying down the principal on your mortgage, you will shorten a 30-year mortgage to about 5 to 8 years, depending on your interest rate.

Payments Can Be Automatic and Timed With Your Paycheck�

This idea appeals to many borrowers, especially because many people are paid every other week and the lender can set the payment up to automatically transfer your payment from your bank account. This also has a positive emotional impact on the borrower, as they feel that they are being responsible and proactive about paying off their mortgage early. Sounds great, right?

Costs to Set-up�

Yes, it sounds great, but as the old adage goes, if something sounds too good to be true, it probably is. Setting up a bi-weekly payment program can cost you $300 - $500 or more on both a new loan or if you wish to convert your current loan into a bi-weekly payment schedule. Also, your lender will most likely charge you $4 - $5 for each and every payment transferred from your bank account. Don�t get me wrong, I am all in favor of paying down your mortgage if you are able to accelerate your payments, but there is absolutely no reason to enter into a bi-weekly payment program. Here�s why:

Set Up Your Own Bi-weekly Payment Plan

You can easily set up your own bi-weekly payment plan. All you need to do is take your monthly mortgage payment ($1,000 for example) and divide it by 12. That comes to about $83. Send in an extra $83 every month ($1,083 total) and you�ve effectively reaped the benefits of a bi-weekly mortgage without the hefty conversion/start up fees or the transactions fees. Another way to shorten the term and reduce the total interest paid on your mortgage is to send in one full extra payment a year (13 total payments instead of 12). This may make sense if you receive annual bonuses or are paid in lump sums or commissions as opposed to hourly or salaried employees. On a $150,000 mortgage, bi-weekly payments will save you about $40,000 in interest over the life of the loan!

Requires Discipline�

These methods described require a certain degree of self-discipline. Also, if you don�t plan on staying in your home for the remainder of your mortgage term, you may lose some of the benefits of continuously paying down the principal over the period of 30 years. Just remember that the advantages of a bi-weekly mortgage can be yours without involving a third party or forking over large fees.

The Option of Escrowing Your Taxes and Insurance�

Most conforming lenders assume you will be escrowing your taxes and insurance to avoid a large tax bill and keep your monthly payments more uniform However, you are almost always given the option of waiving the escrow account and paying the taxes and insurance directly when they become due. Many savvy investors make it a rule not to escrow their taxes and insurance and instead invest that money in an account (stocks, bonds, mutual funds) that will earn interest for them. However, the majority of homeowners would rather not bother with that and instead prefer the convenience of a set, predictable payment every month. Also, escrow waivers typically carry a very small increase in the interest rate with conforming loans.

Subprime Lenders and Escrowing�

Subprime lenders, however, operate differently. Almost all subprime lenders do not charge extra if you decide not to escrow your taxes or insurance. Many people speculate that these lenders to that in order to give borrowers the impression of a lower monthly payment. BEWARE! Many subprime borrowers are shocked when they receive a tax bill for several thousand dollars. These borrowers probably assumed that their monthly mortgage payment included taxes and insurance. I recommend that almost all borrowers, especially those that have had financial difficulty in the past, to escrow their taxes and insurance so that their monthly payment is as steady as possible.

Escrowing Could Add to Your Closing Costs�

Make sure you tell your broker or lender that you would like to escrow your taxes and insurance before you are at the closing table! Most lenders require a few months� �cushion� so that there is enough money in the account to pay the bills when they become due. Depending on what time of the year you close your loan, this could add thousands to your closing costs, but you will be glad you did it. If you are in the market for a subprime loan, the last thing you need is to receive a huge tax bill unexpectedly!

- Bad Credit OK
- New Purchase, Home Equity & Refinance
- Get up to 4 offers
- Short Application