Leading NY Mortgage Company Offers 5 Ways to Beat the Subprime

Mortgage Crisis

Somerset Mortgage Bankers List Survival Tips for Homeowners

Long Island, NY,  January 28, 2008 – In response to the current subprime mortgage crisis Somerset Mortgage Bankers, a New York based nationally known lender, has developed a series of “survival tips” for homeowners.

Somerset Mortgage Bankers’ Managing Director Gregg Marcus says although these are difficult times for many homeowners looking to re-finance, there are a few things people can do to give themselves a head start.

He says if you live in an area prone to foreclosures, even if your house has held onto its value, you may still have great difficulty refinancing. Additionally, lenders are scrutinizing credit reports, appraisals, and proof of income like never before, so it's become much harder for even creditworthy individuals to get out from under the burden of their current loan, subprime or not.

“If you currently carry a subprime loan - like an adjustable rate mortgage or an interest only mortgage - then it's well worth your while to do everything in your power to refinance into a safer fixed rate loan. And although it may have reached a point now where that's easier said than done, there are still several potent and prudent measures you can take to improve your chances of being approved – and we can show you how,” says Marcus.

1.      Check Your Credit Report: Before letting any prospective lender/refinancer access your credit report, you should know ahead of time exactly what they're going to find. Order copies of each of your credit reports from the major credit reporting agencies - Equifax, Experian, and TransUnion. Then review them each carefully. Credit reports are often riddled with errors - over 75% of them, in fact - and about one-quarter of those errors are considerable enough to prevent you from being approved for a mortgage, new or refinanced. Most of those errors can be easily remedied through a little proactive communication on your part, and leaving them untended could easily lead to your creditworthiness appearing drastically worse than it actually is.

2.      Pay Down Your Credit Cards:  Pay down as much on your credit cards as you can afford, starting with the highest-interest ones, and then wait at least a month for it to show up on your credit reports before applying for refinancing. In the best of scenarios, you would carry less than 25% of your total credit limit in credit card balances. If you can't do this, call each of your creditors and ask them to raise your credit limit. This will increase your ratio of credit available to credit used, a major factor in calculating your credit score.

3.      Prove Your Income: Gone are the days of stated income loans and no doc loans, two casualties of the subprime mortgage crisis. And though you may be able to find a lender out there still offering them, the qualifications are going to be near-prohibitively steep. To get a mortgage these days, you need to be able to prove your income with tax records, bank statements, payroll stubs, or all of the above.

4.      Put Your Home's Best Face Forward: With declining home values prevalent, most lenders are going to require a new appraisal before deciding whether to approve a refinance. And whether the lender does or not, if you've done any improvements at all to your home, you'll want a new appraisal. Before that appraisal is ordered, then, do everything you can to make your home appear more valuable. Giving it a paint job is one of the most inexpensive compared to the value it provides. So is cleaning up the yard and improving curb appeal.

5.      Do Your Homework: Don't just thumb through the phone book for a lender. And don't be taken in by those direct mail ads promising you the implausible (the real estate equivalent of ambulance chasers). Find yourself instead a qualified lender, preferably one who's an accredited member of the Better Business Bureau, such as Somerset Mortgage Bankers (www.smbloans.com).