Buying a Home With Bad Credit Part 2 Secret Passwords From The Series "Life After Debt"

The Secret Passwords

“Members Only.” No, I’m not referring to an outdated designer label, or an exclusive golf and country club. I’m not even talking about those fraternal organizations with their “unique” hats and super secret handshakes and passwords. Well, maybe kinda, sorta, anyway. What I mean to say is that the “Home Ownership Club is also a fairly exclusive enclave. But, of course, Ya gotta have the “right stuff” to get in. For years, this club was exclusive only to those who had high incomes, and perfect credit. Long and steady employment histories and easily documented income were the order of the today. And not surprisingly, much of the home ownership club is still that restrictive. But, wait! There is a way into "The Club," and NO its not through the servants entrance! If you know the right secret passwords, anyone… yes anyone can get accepted into the club. Regardless of your race, religion, creed, social position, or family name, or any other social barrier. You Can Join if you know the four secret passwords. The passwords to the Home Ownership Club are...

4) Income: Well that should be self explanatory, you would think… but alas, there is a bit more to it than that. Mortgage Companies must know that you indeed have some… Wow, there’s a newsflash, huh? Well, yeah, actually. They need to know things like, who, what, where, when, how much, and how long? Plainly put; Who do you work for? Are you an employee or Self Employed. What is your profession or business? Where is your physical place of employment or business activity (this includes complete addresses and phone numbers). When did you start this work? How much money do you earn and how can you prove it? How long have you been in this line of work/business? Income is the 4th most important password to the Home Ownership Club. The amount of Income also determines a risk factor, another password called Debt Ratio. More about this later…

3) Equity: Otherwise known as Down Payment. I have often said that "Equity covers a multitude of sins." How true it is… Especially when it comes to Bad Credit Mortgages, All Mortgage Companies approve loans based on Risk, among other factors, and one of the foundational elements of assessing that risk is Equity! In mortgage speak, it is also referred to as LTV or Loan To Value. This being the percentage of the Loan Amount in relation to the Appraised Value of the Subject Property. A Mortgage at 80% LTV is the same as saying the borrower has 20% Equity of 20% Down Payment. The higher the Equity (Down Payment), the lower the LTV, and thus the lower the LTV, the lower the risk to the Mortgage Lender. Here’s a hint… like most of us, Mortgage Companies really prefer Lower Risk. What am I trying to say? Simply put, to a certain extent, you can overcome Bad Credit with a large down payment. Does this fix the whole problem? Heck no, but it sure does help a lot. Equity is the 3rd most important password to the Home Ownership Club.

2) History: Gee, I knew I really should have stayed awake in this class… Well, I can guarantee the Mortgage Companies stayed awake! This 2nd most important password is an integral part of getting approved for a Home Loan with Bad Credit. As you may have already figured out, I am not talking about your least favorite high school class. Truthfully, you can fail that class, but the real life version is a bit more important. Mortgage Companies want to learn your personal History. History with chapters such as; Employment/Earnings History, Residence History, Rental/Mortgage Payment History, and Credit History are a few worthy of mention. For example, Mortgage Companies prefer an Employment History of at least 2 years prior, (preferably in the same line of work) with a steady, or better yet, an increasing Earnings History for the same 2 years minimum. Mortgage Companies also prefer a steady Residence History of a least 2 years! Thus, living in a variety of locations for the last 2 years may not be a good idea.In Addition to Residence History, a critical item is Payment History! Well documented, on-time payments of your rent or mortgage is a Major Risk Factor and you Must know this! Even with Bad Credit, a Good Rental/Mortgage Payment History goes a long way and is a kew factor in joining The Home Ownership Club.

...and The #1 Secret Password is...

1) …To Be Continued: Here's a hint; Size really does matter! But you’ve heard that before. Newsflash… When it comes down to possibly the single most important password to the Home Ownership Club, this is the Golden Code that gets you in the front gate. It is so important, I am going to dedicate the Next Article just to this Password. Stay Tuned and remember that there really is “Life After Debt.”

About the Author:Ronald Farrell Black is President of Independence Mortgage Capital, and an Expert in working with Home-Buyers and Home Owners with Bad Credit and other special issues. His mission is to help folks through the trauma brought on by Financial Setbacks, Bad Credit, Bankruptcy, etc., and to provide resources for Home Mortgage Financing, Debt Management and Debt Relief. Helping others to overcome financial problems and to restore and rebuild their credit. For more information on Bad Credit Mortgage Loans, and “Life after Debt” visit his website: http://www.debtconsolidationstore.net