There is such a thing as special circumstances and these occur when your application is a little iffy. In these cases your mortgage application will be rejected or else the lender will ask you for some more information and documentation in order to deal with any problems that they feel have arisen. In some cases the lender will simply change the terms of the mortgage that they have offered you.
An example of special circumstances is when you have not been at your job for 2 years, another is when you have not been paying all of your bills on time each month or even if you are self employed.
If you have to deal with special circumstances then you will have to find out about a problem appraisal, buying a condo, no doc or low doc loans and bad credit because all of these factors can play a part.
A problem appraisal crops up from time to time for some people and this is when it turns out that the actual property value is less than the amount that you have said you would pay for it. This can cause some complications. If it turns out that the value after appraisal is less than the amount you were going to borrow you could find yourself having to find a way to pay a larger down payment or else go back to the drawing board in terms of the sale price of the home and property.
Buying a condo or a townhouse is quite different than purchasing a house because when you buy a condo you are not buying the structure itself, you are only purchasing the airspace within the walls. The walls you will share ownership with the rest of those who own parts of the complex that you are going to live in.
A mortgage lender will not just give you a loan for one of these types of homes, they will want to take a look at the complex. They will look into the physicality of the condos and their financial situation. They do this to make sure that they are not lending money to someone who would be sinking this money into a bad complex.
These types of loans also often require the condo association to fill out a questionnaire that will help them to decide if it is worth their while to lend the money to you. If they do not feel that they would be able to get their money back from the foreclosure of the condo then they will not lend you the money.
The types of things they will be looking for with the condo complex is whether or not the construction is entirely done. You will find that virtually all lenders will want to see that the construction is at least 90 percent done. They also like it when the majority of the units in the complex are owned and lived in by the owners rather than all rented. The lender will also want to see the information on the insurance covering the condos. Do they have enough hazard insurance?
Another important aspect of the complex is how well it is managed. If it is well managed and they have a good operating budget this will go in your favor. They will also be very interested to see if the association will be able to cover any emergency repairs if they should arise.
When you are thinking of buying a condo you will have to get some documents from the seller. You will want to get articles of incorporation and the guidelines of the homeowners association. If they have any ongoing litigation then you will need to documentation of this as well. And it never hurts to ask for the minutes for the last year or so of their association meetings. Going over these carefully can tell you a lot about the complex and whether you really want to buy a unit there.
When thinking of purchasing a unit in a condo complex you need to make your approval of all the documentation that you receive a condition of the sale. And check out your local and state laws concerning the sales of condos because they do differ from area to area and you need to know how they will affect your home purchase.
No doc loans are those that require no documentation at all and low doc loans require very little. These kinds of loans are for people who happen to be self employed or those who are new to the country or just cannot show others their income info. The interest rates attached to these types of loans are generally higher than other loans but for some people they work.
No doc loans also require a very large down payment to get approved. You might need anywhere from 20 to 35 percent of the sale price as your down payment. This is often too much money for someone to come up with. Your credit will also have to be in pristine condition.
Low doc loans on the other hand will have to have just as good credit and you will also have to provide proof of your yearly income. And if you happen to be self employed you will have to show that you have been successful at it for at lest 2 years previous to your mortgages application.
Low doc no doc loans are great for people who have a lot of available money on hand to use as a down payment, they can then later on refinance their loan with a lower interest mortgage. This buys some time to improve your credit and get it in the shape that a lender will want for a traditional mortgage loan with a lower interest rate.
These types of loans can be called Alt-A mortgage. They are called this because they are an alternative mortgage and you have to have excellent credit, thus the A. There used to be loans that were called B, C, and D loans as well for those sliding down the scale of not so hot credit. This has been simplified to subprime loans.
Having good credit is key to getting a good mortgage loan so if you have flaws in your credit you need to work on improving it before you apply for a mortgage loan, any kind of mortgage loan. If you do not take the time to improve your credit you could get stuck with a subprime mortgage loan.
Martin Lukac, represents http://www.RateEmpire.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies! Visit http://www.RateEmpire.com today
