Wholesale Lenders basics

The Mysterious World of Money Lending..

Like all of your friends and relatives, you are reaching this stage in life where you have to consider getting married, having children and buying a house...As frightening as it seems, this is just great and the scary part is actually...how are you going to finance everything? The house, the bills, school, shopping, taxes...? Rest assured, all you need to do is what everyone does: get a loan! This may seem a huge responsiblity to you and probably a bad idea, but this is what everyone does as we don't really have the choice. Finding money is not that hard actually. If you are ready to establish a budget and check it regularly, if you already have a bit money on the side and if you are serious and organized, you can easily borrow money and pay it back without any problems... First of all, where can you get a loan? How does it work? Originally, only banks offered loans: they lend you a big sum of money that you couldn't usually afford and allow you to pay back monthly, charging you an interest. The interest rate is a percentage of the whole sum that adds on to your monthly payments so that the bank can make some money and pay their own expenses. Then, private investors saw this as a juicy budget and created firms specialized in lending. Some of them are not attached to banks at all and offer different kind of products. The money is gathered by wholesale lenders who then sell it as mortgages and loans to banks and brokers. Mortgage brokers then add their own fee to make a living out of it. Most of the time you will deal with a mortgage broker but some wholesale lenders have their own retail branches.

What Kind of Mortgage?

You are maybe now more decided to take a loan; you browsed the internet and saw thousands of banks and companies advertising about their products. You have read words like Fannie Mae, debt-to-income ratio, arrears, subprime mortgages...and you feel a bit overwhelmed. That is totally normal. Try to relax, take a deep breath, and get ready to cope with a jungle of complicated words and red tape! This being said, everything can be summed up pretty easily. When you meet a broker, he has to ask you several questions about your situation: your income, your existing debts, if you are married or not, what kind of project you have in mind and how much money you need, etc. He also has to respect some guidelines like Fannie Mae or Freddie Mac which will define if you are solvent or not. If you are considered solvent, it means it seems pretty safe to lend you money and you will get a good loan. If you don't meet the prime standards, getting a loan can be quite difficult but you can still be granted a subprime mortgage, but the interest will be higher and it will probably be less flexible. Your solvency will be mainly defined by your debt-to-income ratio, which is a percentage calculated using the amount of your income and your monthly debts. If you never borrowed before, don't have any debts and that your income is quite high, the chances are you will get a good mortgage. However, you may be in the opposite situation...well, don't worry, as there are mortgages for everyone...

Don't think YOU can get a Mortgage? Think Again..

Alright, you have just read this article and found that you already are familiar with all that. You probably have a loan, and even existing debts. If you have bad credit, you don't have to worry either, as bad credit mortgage lenders are willing to help you. Bad credit mortgage lenders are private investors or firms that take even more risks than subprime lenders. People with bad credit are not considered as solvent and cannot be granted any loan. But new kind of lenders are willing to take the risk, and erase your bad credit and existing debts; as you can imagine, they will charge you a high interest rate that will make it difficult for you to pay back, so think about it seriously and consider every option you have. Some of you were probably granted a subprime mortgage, which was at a variable rate; the rate went suddenly higher, as did the payments, and you counld'nt afford to pay back. You then received a notice from your lender declaring that your house was in foreclosure and that it will be sold at auction unless you find a way to pay back your debts as quickly as possible. You can still turn to foreclosure lenders, who are willing to pay back your debts for you through a new loan; but check out their fees and interest rates first. Some foreclosure lenders are scam and buy back your house without erasing your debts, which will put you in even more trouble, so trust only certified lenders.

Mortgage Lenders