Get A Mortgage With Bad Credit

Bad Credit Home Loans - Harder To Get But Not Impossible

2010-10-12T05:35:00.000-07:00

Let's face it. The market has tanked, unemployment is up and the number of people being qualified for home loans is considerably down. Part of the reason that so many people are having a hard time getting home loans is that banks have tightened their approval standards, making it very hard for people with decent credit to get a mortgage let alone considering those with bad credit. In this economy, it's easy to see why those who once had stellar FICO scores are barely making ends meet, but unfortunately lenders rarely take these mitigating factors into consideration. The good news is that bad credit home loans are still available, they just aren't as plentiful as they once were.

Banks are still backing mortgages to those with not so good credit, which are loans often referred to as sub-prime lending. This term simply means that those seeking these types of home loans don't have the same credit standing as their average client. People with lower credit scores are almost always responsible for paying back their mortgage at a higher interest rate, but the good news is that there are several ways to get a better rate. Even if you start off with a high interest, sub-prime mortgage, you can refinance and get a better rate once your circumstances improve. Be sure to work with a bank and broker that you trust, tell them exactly what you are looking for and read over the contract with a fine toothed comb.

If you are honest with yourself, shopping for bad credit home loans doesn't have to be bad. Laying out your cards on the table from the very beginning will give you a better shot at finding banks that are willing to work with you. There are extensive lists of poor credit lenders that not only open to accepting new clients, they also pride themselves on helping people to fulfill their dreams. In some instances, having an existing piece of property or other tangible goods can be used as collateral, thus giving you a better interest rate. Having a realistic plan, which includes better job prospects or just simply cleaning up your credit can help you to qualify more easily.

Oftentimes, those with poor credit ratings can work with credit repair services, both non-profit and for profit to qualify for a better mortgage. Often these same agencies work in conjunction with a plethora of lenders, including those who back bad credit home loans. You can always opt to attempt repairing your credit yourself, but be warned that this can be a tedious process. After getting a copy of your credit reports, you can look it over for errors. Getting just a few derogatory marks removed will improve your rating and can sometimes make it jump considerably.

What you should realize is that even if you are not in a position to qualify for a loan right now, this can easily change in the future. In fact, not qualifying for a home loan may be an indicator that you are not prepared to take on such a large financial undertaking. At the same time, you don't have to accept a rejection from just one company and are free to continue to shop around. Take your time, plan according and keep at repairing your credit.

For information about these types of loans visit bad credit home loans. Specifically read about my personal experience with such loans.

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How to Turn a Terrible Bankruptcy Into a Profitable, Win-Win Joint Venture

2009-07-09T02:20:00.001-07:00

The sad truth every business owner faces today is that sooner or later, 9 out of 10 of us in business will go bankrupt.

Bankruptcy is always a terrible thing for everybody affected. Everyone loses - customers, business owner, creditors, suppliers, employees.

NOBODY ever gets all the money they're owed (except secured creditors, who even then can lose out). And almost EVERYBODY loses something from a business gone bust.

BUT - there IS a little-known way to turn a business ALREADY bankrupt (that is, they've shut their doors, fired the employees and put the "For Lease" signs up) into an incredibly profitable, win-win-win money-making joint venture.

Let me explain.

In my opinion, the most valuable assets most average businesses have is not their equipment, inventory, accounts receivables or work-in-progress - it's their PHONE NUMBER and CUSTOMER LIST.

In many cases more money is spent over the lifetime of a business building the value of these two assets alone than almost any other business expense or investment. But for some reason, when the business goes bust and the liquidator is appointed, these assets are almost NEVER sold.

Which is very strange when you think about it. If a business goes bust, their phone number is still out there (on Yellow Pages Ads, directory listings, business cards, invoices, brochures, promotional materials and so fourth) and will be generating new enquiries for several months - even years - to come. And the existing customers are still there. All they need is someone else to buy from!

This creates an amazing opportunity to create a win-win-win joint venture, whether you're the owner of the business gone bust or a competitor.

BOTH of you can make money - ethically - and make the most of a bad situation by simply having the other business owner explain his/her situation to their customers and recommend you - the competitor - as the best alternative. Then, simply split the profits.

Plus, the bankrupt business owner can LICENSE his/her business phone number to a competitor and charge a percentage of profits created from ongoing leads. This works especially well if the phone number is in the Yellow Pages or any other directory or classified listing.

Everybody wins in a joint venture like this. The competitor wins because they'll be getting a ton of new business for no cost. The bankrupt business owner wins because he/she gets to keep a slice of their most valuable asset - their customer list - which may help pay off debts over time.

And - the creditors win because, if patient, they can often make a lot more of their money back over time than they otherwise would.

Oh, and in case you think it's sneaky or unethical to buy your competitors phone number and divert all the incoming leads to your business - you can simply tell these new potential customers that your competitor has gone bust and all new enquiries have been diverted to you. Most of them won't care anyway, as long as you offer the same value.

These joint ventures are incredibly easy to put together and can work more effectively than traditional joint ventures. Whether you're a joint venture broker, business owner or liquidator - this is a type of JV you can do all year long with PHENOMENAL results.

A Sample Hardship Letter For Loan Modification - A Template to Start With

2009-07-07T05:27:00.001-07:00

The hardship letter can be the most intimidating part of the loan modification application process, and unfortunately most homeowners are lost on what exactly needs to go into a hardship letter for loan modification.

This sample hardship letter is to give you a basic feel for what you should include in your own hardship letter. There is a sample letter as well as instructions as to what you should bring up in each section. Everyone has a different story concerning their financial hardship, and you need to tell yours in order for your lender to take your loan modification proposal seriously.

Account number: [Your loan number goes here]

[The name your loan is under, usually your own.]
[Your residential address, which is also the address you are requesting loan modification on. you cannot get a loan modification on a piece of property you are not living on.]
[Your contact information, like phone number and email]

[If you know the name of the person who is going to read the hardship letter, use that, if not...]
To Whom It May Concern:

[Clearly state why you are writing this hardship letter for loan modification. Choose either we or I, it is your preference.]
I am writing this letter to address the reasons behind my falling behind on my mortgage payments with you and to formally request you work with us on a loan modification. I have fallen under various circumstances that have made it difficult to make even the simplest ends meet. I would like to work with your institution to meet more reasonable terms on my mortgage and stay in my home.

[Give a brief look into why exactly you cannot afford your monthly payments. Don't go into a big story -- try to keep it to one paragraph.]
I was laid off a couple of months ago and had been unable that pays well enough to afford all of my monthly expenses. I had kept up for the past two months through my savings, which has run dry. However, last week I acquired a position at a company that pays comparatively in comparison to my old position and I am to start in a couple of days. My wife, who had paid half of all the monthly expenses, has been diagnosed with X and cannot work anymore until she has been treated successfully. Luckily the doctors say she should be fine in about six months, but unfortunately we do not have enough to make ends meet and afford treatment as it is now.

[Explain how you are planning to get back on track.]
I did some calculations, and my new job will be providing enough to afford my monthly expenses as well as a monthly mortgage payment of $X. Once my wife is better we will completely financially stable again, but until then things are more than a little tight. We are requesting [State exactly the loan modification agreement you feel you can handle and they will approve of]

Thank you for your time and consideration, and I look forward to working with you towards an agreement that we can both handle.

Sincerely,

[Signature]

Remember, this is just a sample hardship letter for loan modification to get you started. You can go even more in depth with your letter -- as a matter of fact, it's recommended, but do not go into a long and drawn out story. Your lender will see that as a mound of excuses and could very well deny you based on it.

If you're interested in additional sample hardship letter templates to fit your specific situation, visit my simple, no nonsense loan modification guide and resource: http://Home-Loan-Modifications.info

Lenders For People With Poor Credit

2009-06-28T03:03:00.001-07:00

There are lenders for people with poor credit out there if you need to get a loan and have not so good credit history. However, there are a few important things you need to know.

If you are looking for a lender with poor credit, you are not going to be able to use a bank or credit union. These lenders don't like taking any sort of risk and you, with not so good credit history, represent a significant risk.

You will probably need to seek out bad credit lenders with you have terrible credit. These are lenders that specialize in working with clients to give out loans catered to credit scores that are not high. These lenders will have a variety of loan packages, each tailored to different low credit scores. The cost of poor credit loans is that you will always have to pay much higher interest rates.

However, sub-prime lenders are good because they give people with less than stellar credit the funding they need to buy a house, get a mortgage, or start a business.

Now, when looking at subprime lenders, it's important to shop around so that you can secure the best deal. There are many such lenders online. You should look at least 3 such lenders to compare their prices. This is crucial since the loan interest rates for bad credit lenders will widely vary, depending on the company. To get the best loan rate, you need to do comparison shopping.

So if you have not so good credit, know that there are lenders for people with poor credit scores.

Lenders for poor credit do give out loans to people with bad credit history. However, to find lenders for very bad credit, you must look online to find loan companies willing to give out these very bad credit loans.

I Need a Personal Loan Quick But I Have Bad Credit

2009-06-26T11:34:00.001-07:00

I need a personal loan quick, but I have bad credit--it seems like something that is being said more often with the condition of the current economy. If this is the situation you are in, what do you do? You need to get your car fixed and you do not have the money. You have a home repair that needs taken car of and you don't have the money. It can be any number of things that came up unexpectedly that causes you to need money.

If you have bad credit, getting the needed money may not be easy, but there are ways of coming up with the money. The best thing to do if you have bad credit is to try to borrow the money from a friend or a relative. But in many cases, this is not possible.

Another option is to pawn items that you have in your home. This will give you quick cash, but if you want the items back you will have to plan into your budget for the repayment of the loan. The good thing is you usually have 3-4 months to reclaim your items. As long as you have something of value, you can have the money in no time at all. Electronics and jewelry are two types of items that can bring a nice return.

If you have items around your home that you do not need, a garage sale or an eBay auction can be a great way of making extra money. The only issue with this is the time factor. If you need money in a week, this will work. If you need it in an hour, you are going to have to use another option.

The last option for a quick bad credit loan is a payday loan. A cash advance loan is an option that can have as much as $1500 in your hands in an hour or less. But before you get a payday loan, it is important that you completely understand the terms of the loan. Cash advances are unsecured, short term and do not require a credit check. Most cash advance services do have certain requirements, such as; proof of employment, checking account information and a working phone.

These loans have helped many people out of a pinch, but beware. They are not without a price. The fees can range any where from $15-$30 per $100 borrowed. It some cases, having the money may be worth the expense of paying the fees. That is something you will have to decide for yourself.

Do you need money quick, but have bad credit? Find out more about bad credit loans, free credit card debt relief and free credit repair.

To Avoid Foreclosure Refinance Or Renegotiate Your Home Loan

2009-06-25T12:22:00.001-07:00

Many homeowners are feeling the pressure of making their loan payments and are seeing the possibility of foreclosure. Refinance or renegotiation of home loans has become an increasingly popular and simple solution to his potential disaster. You can refinance completely and essentially have a whole new loan with better rates and a more manageable payment or you can take your existing loan and renegotiate your payments so that they fit your current budgetary needs.

If you have a pretty good credit rating and are still relatively stable financially then a refinance is probably your best option. You can go to a lender or bank and get a new loan with better interest rates and more manageable payment. If you are in the beginning years of your current loan then this makes sense. If you are close to the end of your current mortgage, it may make sense to make adjustments elsewhere.

Make an appointment with a financial counselor or banker that you trust and ask the important questions. Find out the details of your current loan; see what the interest rates are and where you stand on remaining principal. These details will all factor into your decision making process. If you are looking for cash back then a refinance would be your best option.

If your circumstances are more dire and you are facing imminent problems in making your loan payment, or have a cash flow issue that will not be changing any time soon, then you are more likely able to renegotiate your current loan. The usual process is to take your current total amount owed, principal and interest and re-write the payment schedule adding more years of payment to the end of the loan. You are not borrowing any more money, or getting a better rate with this option, rather you are getting a smaller monthly payment that will allow you to stay in good standing with your mortgage company and stay in your home.

Although the mortgage industry is in a bad state, it would only get worse if everyone started walking away from their homes. It is in the best interest of lending institutions to make every attempt possible to keep people in their homes. Unfortunately, the best deals always exist for those people with the best credit and debt ratio scores. While a renegotiated mortgage will not necessarily be the best decision you can make for long term financial solutions, it will keep you in your home now. When your financial situation gets better and your cash flow improves then you can think about rectifying the situation.

Before you let current financial trends get you depressed, do your research and get proactive. You might be better off than you think.

A loan modification may be a better option to avoid foreclosure.

Learn how to get qualified for a rate modification of your home loan.

How You Can Get a Home Loan Within 4 Months

2009-06-25T01:56:00.001-07:00

It only takes a good credit rating to get a home loan from financial lenders. I believe every bank is willing to grant customers their mortgage credit request provided they have met the necessary requirements.

In most cases, mortgage home loans need a simple confirmation that the credit applicant is worthy of being giving credit approval. But there is one main way they can be assured that you will repay the housing credit they give you:

Your credit report, because it shows your past history of repaying loans extended to you. What they do is to buy your credit report from Experian, Transunion, and Equifax. They will only use a score out of the three provided by the credit bureaus in making their decision on giving you the home grant. They will usually go for the middle score out of the three.

But if you have got a pretty bad score, then it's time to get your act together and begin working to rebuilding a good credit rating. There are two ways from which you can choose in fixing your profile: The do-it-yourself method which is also known as the self-help credit repair, or using the services of a credit repair agency.

In any case, you should expect to get good results in a minimum of forty-five days. I say this because corresponding time via mail between you and the bureaus will take this time frame.

However, if you are banking on the DIY method, you are likely to spend the same time frame but the good thing is that you control the whole process as opposed to assistance from a a credit repair law firm.

At the end of the repair process when your score has been raised, you can proceed to apply for housing loan and look forward to an approval of your loan.

Visit do-it-yourself-credit repair or credit repair services to learn more on raising your credit score 200+ points to get approved for car, home and credit card loans.

Mortgage Glossary of Terms

2009-06-18T22:32:00.001-07:00

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A brief list of some of the most common Mortgage terms.

Adverse Credit

The term used if the borrower has a poor credit history. This could include previous mortgage or loan arrears, bankruptcy or CCJ's. Other
terms used to describe an adverse credit mortgage include:

Bad credit mortgage
Poor credit mortgage
Non status mortgage
Credit impaired mortgage
No credit mortgage
Low credit score mortgage

APR (Annual Percentage Rate)

The interest rate reflecting the cost of a mortgage as a yearly rate. The APR provides home buyers with the ability to compare different types of mortgages based on the annual cost of each.

Arrangement Fee

The fee you pay your Lender in return for them providing you with a mortgage. Usually paid on completion or with your application, these fees usually apply when you take out a fixed rate, discount or cashback mortgage.

AST (Assured Shorthold Tenancy)

A form of tenancy that gives the landlord the right to repossess their property after a set amount of time laid out in the tenancy agreement. New tenancies are automatically ASTs unless otherwise stated.

Assured tenancy

The landlord can charge a market rent (the current rate for similar property in that area) and take back the property under certain conditions, as set out in the Housing Acts of 1988 and 1996.

Bridging Loan/Finance

Short term loan to enable the purchase of one property before the sale of another essentially releasing funds that are required for the purchase. You should always consult a professional before considering any bridging
finance as it could be a solution that is worse than the problem.

Brokers Fee

A fee charged by an intermediary or advisor for locating the most appropriate mortgage for the borrower.

Buildings insurance

Insurance you can take out when you buy a property that will cover the
cost of any damage to the house and or contents..

Buy to Let

A mortgage meant for those who wish to purchase a property to rent out to others. The decision on whether you are able to repay this type of mortgage is often based up on the future rental income from the property rather than the personal income of you the borrower.

CCJ (County Court Judgment)

A judgement reached in the County Court generally realted to non payment of a loan, mortgage etc debt in general. If you pay off the debt, the CCJ will be satisfied and a note is put on your records that states this.

Chain

A housing 'chain' made up of a number of buyers and sellers, essentially the line of buyers and sellers involved in each house move.

Charge

Any right or interest, especially with a mortgage, to which a freehold or leasehold property may be held. Basically a charge is the claim the lender has on the property until the mortgage or loan is satisfied.

Completion

The term used when the seller and buyer exchange the finances required
to buy a property through their respective solicitors. At exchange of contracts
a deposit, usually 10%, will have been paid. At this point the buyer
becomes legal owner of the property.

Conveyance

The legal process in which ownership of the property is transferred
from the seller to the buyer. Generally undertaken by a solicitor,
or licensed conveyancer.

Early redemption fee

If you decide that you want to sell your property or remortgage then
you will be redeeming you mortgage early. Most lenders charge a penalty fee,
especially during any period of a fixed, capped or discounted rate. Be sure
you are clear about any potential penalties when you are about to take on a mortgage.

Equity and negative equity

The amount of value in a property that isn't covered by a mortgage - simply take the amount of the mortgage from the valuation to work out the equity. This is where the money you owe on the mortgage is greater than the value of your property.

Exchange of contracts

The contract is a written agreement that lays out the terms between the buyer and the seller. When both parties exchange contracts, usually weeks before completion, the deal becomes legally binding. Often a deposit of around 10%, is paid at this stage.

Fixed Rate

A set interest rate on a mortgage fixed for a period of time. This varies from lender to lender.

Freehold

If you are the property owner outright then your property is freehold.
Most houses are freehold wheres many flats are leasehold, since you are not the
owner of the whole building containing the flats.

Gazumping

If you are in the process of purchasing a property and your offer has
been accepted but the seller gets a better offer, before you complete, and takes
it then, you've just been 'Gazumped'.

Interest Only Mortgage

A mortgage whereby the borrower is only required to pay inerest on the amount borrowed during the mortgage term. It is the borrowers responsibility to ensure that enough funds will exist (either through an investment policyor other means) to repay the full mortgage at the end of the term.

Intermediary

A mortgage broker or advisor who finds the most suitable mortgage for a borrower and arranges the mortgage on their behalf.

Leasehold

If you buy a leasehold property you don't own the property rather the right to live there for a specified period of time, however much time remains on the lease. The owner of the property is called the freeholder or landlord.

Liability

This relates more to commercial mortgages. With a commercial mortgage liability for the repayment of the loan depends on the legal structure of the business:

A sole trader will be personally liable for the mortgage debt. Personal assets could be seized if the business defaults.

Partners are jointly liable for the debts of the partnership and their personal assets are at risk

With a limited-liability partnership and a limited company, the liability falls firstly on the business rather than on the individual partners and directors. The lender may take a floating charge on business assets in general, rather than simply on the current property being purchased.

The lender may also insist on personal guarantees as a condition of granting the loan, in which case the partners and directors may be held personally liable anyway.

Life insurance

If you have a joint mortgage, life insurance can be acquired that will
see the mortgage paid of should one of you pass on.

LTV (Loan to Value)

The size of the mortgage as a percentage of the value of the property i.e. A £90k mortgage on a house valued at £100k would mean an LTV of 90%.

MIG (Mortgage Indemnity Guarantee)

A one off payment made when you set up a mortgage a kind of insurance policy for the lender. This offers them protection against the
value of the home falling to less than the mortgage. It is generally only charged
to borrowers with a less than 10% deposit, but this can
vary.

Mortgage

A loan to buy a property where the property is used as security against you
paying back the loan.

Mortgagee

The company or organisation that lends you the money.

Mortgagor

The person taking out the mortgage.

Non-Status

Where a lender may not require income details from you or may accept
some previous poor credit history i.e. CCJ's or previous mortgage arrears.

Payment Holiday

A period during which the borrower makes no mortgage payments.

Regulated tenancy

A legal right to live in your accommodation for a period of time. Your tenancy might be for a set period such as a year (this is known as a fixed term tenancy) or it might roll on a week-to-week or month-to-month basis (this is known as a periodic tenancy).You are a regulated
tenant if you moved in before 15 January 1989, you pay rent to a private landlord
and your landlord does not live in the same building as you.

Remortgage

The taking on of a second mortgage to pay off the first. The most common reasons for doing this are that another mortgage is available at a better rate or that the value of the property has gone up allowing for the opportunity to borrow more money against the property.

Right to Buy

For example, a tenant in a council owned property may purchase the property at a discount depending on length of their tenancy.

Self Certified

Generally when a borrower applies for a mortgage he or she will be asked to provide pay slips or company accounts to prove their income. If it is difficult or inconvenient for you to provide this evidence, you can choose to self-certify your income. This involves signing a declaration which states your income sources and amounts. Lenders will charge you higher rates than average and offer you a more limited range of mortgages if you choose to self-certifyyour income, in general it's not a good idea to self-certify just to avoid some paperwork.

Stamp Duty

Tax paid by the buyer of a property set at 1% for properties over £60k,
3% for properties over £250k and 4% for properties over £500k.

Structural survey

The most wide ranging check of the structure of a property. This is carried out by professional surveyor and should uncover any defects or faults with the building.

Tenancy

A legal written agreement between a landlord and tenant that sets out
the terms of the rental.

Term

The period of years over which you take the mortgage and repay
it.

Term Assurance

An insurance policy designed to repay the mortgage on the death of the insured person. Level Term Assurance covers a principal sum throughout the policy term and pays out the full amount on death. Reducing Term Assurance is designed to repay the balance outstanding on a repayment type mortgage upon death. Term Assurance may also pay out early on the diagnosis of a terminal illness.

Underwriting

The process of evaluating a loan application to determine the risk involved for the lender. This involves an analysis of the borrower's creditworthinessand the quality of the property itself.

Unencumbered

Where the property is owned outright and no mortgages or loans are secured
against it.

Valuation

A simple check of the property in order to find out how much it is worth and
whether it is suitable to secure a mortgage against.

Valuation Fee

The fee paid by a borrower to cover the cost of the lender checking that the property is suitable security for the mortgage.

Variable Rate

A type of interest rate the lender can charge. It goes up and down and your repayments change accordingly.

Vendor

The person selling the property.

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Do Your Homework - Find the Mortgage That Fits Your Lifestyle and Your Budget

2009-06-18T04:56:00.001-07:00

You've been looking at houses for months, and finally you've found it--the house that's just right. So now, all you have to do is to purchase your new home, move in, and get settled, right? Not quite. There's one more big step to go-getting a mortgage loan. You're going to want to decide on the type of mortgage and payment terms that fit within your budget. And you're going to have to prepare yourself by doing some research. What follows is valuable information that will be crucial in helping you make loan decisions that will fit your budget and circumstance.

Series: 3 Finding a Perfect Match for your Home Mortgage

Factors That Affect Your Mortgage

Mortgage payments are determined based on the following criteria:

Amount of the loan

Length of the loan

Down payment

Discount points

Closing costs

Credit quality

Income level

Lock in period

Loan Amount: The amount of your loan can increase your interest rate if the amount financed exceeds the conforming loan limits set by Fannie Mae and Freddie Mac, (private corporations regulated by the federal government) that administer loans. The conforming loan limit changes at the beginning of each year.

Shorter loans, such as a 30 year or 15 year note, can save you thousand of dollars in interest payments over the life of the loan, but your monthly payments will be high. An adjustable rate mortgage may get you started with a lower interest rate than a fixed rate mortgage, but your payments could get higher when the interest rate changes.

Down Payment: A large down payment will give you the best possible rate. If you've got the cash now and want to lower your payments, you can pay points on your loan to lower your mortgage rate. The concept is simple: In exchange for more money upfront, lenders are willing to lower their interest rate, cutting the borrower's payments. Remember to consider upcoming expenses and closing costs in your down payment decision.

Closing costs. In addition to your down payment, you will need to pay closing costs for processing your loan and transferring the property ownership from the seller to you, the buyer. Closing costs can range from 3%-5% of your loan amount, depending on where you live, the loan you choose and your closing date. In some cases, you can finance certain closing costs in your mortgage loan. When you apply for loan, your lender will give you an estimate of closing costs, which usually include:

Origination fees.

Costs of processing your loan (includes property survey and appraisal).
Items paid in advance, such as first-year mortgage insurance premium, first-year hazard insurance premium and first-year flood or earthquake insurance premiums, if required.

Escrow accounts – an account held by the lender into which the homebuyer usually pays for city/county property taxes, mortgage insurance, and hazard insurance, if required.

Title insurance charges.

Recording and transfer charges.

Attorney's fees.

Credit Score: Your credit and debt-to-income-ratio affect the terms of your loan through your FICO score which is used to determine your credit rating. If you have good credit and your monthly income exceeds your monthly debt obligations, you will get approved at a lower interest rate. However, if your monthly income barely covers your minimum debt obligations, you will not receive the lowest available interest rate even if you have a good credit report.

Lock-in Rate: When shopping for a loan remember that interest rates change frequently. It is important to ask your mortgage representative if a lock-in rate is possible. This will guarantee you a specific rate, provided the loan is closed, with a set period of time.
Determine How Large a Monthly Mortgage Payment You Can Afford

Your choice of mortgage will be influenced by questions such as
How many years do you expect to live in your new home?
How important is it to be free of mortgage debt before facing your children's college bills or planning your future retirement?
How comfortable are you with the certainty of a fixed mortgage payment vs. a payment that can change over time?

Your monthly payment will vary depending upon the type and length of the loan and the amount you put down. Most lenders will help you select the loan that's best suited to your financial situation.

How Low an Interest Rate Can You Expect?

Shorter term loans offer lower interest rates and are divided into two types. A Fixed mortgage means that the rate is locked in for the life of the loan. Adjustable Rate, also called an ARM or variable rate note, is a note that generally offers lower payments for the first year and then changes periodically based on the terms and conditions of your note. Paying discount "points" can lower your interest rate. If your loan requires you to pay points or if you want to buy "down" the interest rate using points, remember that one point equals 1% of the loan amount.

Choosing the Right Mortgage

If you want the stability and predictability of a set rate for the life of your loan, then a fixed rate mortgage may be for you. Usually the longer the term of the mortgage, the more interest you pay over the life of your loan. Though, a longer term means your monthly mortgage payments will be less than they would be with a comparable shorter-term mortgage.

30 year vs. 15 year fixed rate mortgage.

A 30-year mortgage will have a lower monthly payment and a higher interest rate than a 15-year mortgage. You'll have a smaller monthly obligation but you'll pay more for your house over time because you're paying it off with interest for a longer period.
On the other hand, a 15-year mortgage will have a higher monthly payment and a lower interest rate so you'll pay less for your house because you're paying it off in a shorter period.

Adjustable Rate Mortgage.

ARMs, are short-term fixed-rate loans: After the fixed rate term is up, the rate adjusts at regular intervals in accordance with current interest rate conditions at that time. A 5/1 ARM, for example, has a fixed rate for five years and then adjusts every year for the next 25 years. (ARMs typically run on a 30-year schedule.)

The length of the fixed-rate term on an ARM typically can range anywhere from one month to 10 years. The longer the rate is fixed, the higher the interest rate you'll get. But generally speaking -- and there have been exceptions in the past -- ARMs will cost you less in the short-term. With the ARM, both your monthly payments and interest rates should be lower than either a fixed rate 15-year or 30-year mortgage.

The risk with an ARM is that when interest rates rise, you could end up paying much more than you bargained for. Check to see if your ARM has a cap rate so that if rates increase, your change cannot exceed a certain pre-defined limit.

If you know you'll be in a home for 12 years or more, a 30-year fixed rate mortgage might work better for you than, say, a 5/1 ARM, where you fix a rate for five years and then it adjusts every year after that. But if you think you won't be in the home longer than five or six years, a 5/1 ARM might make more sense.

Mortgage Shopping Tips.

Talk to the mortgage specialists at your bank. If you are starting to look for a home they can asses your financial situation and help you determine a purchase price that is within your budget and a mortgage program that suits your lifestyle and income. In many cases your advisor can prepare a pre-approved mortgage before you finalize your purchase.

Ask a mortgage specialist at your bank to help you calculate payments at different interest rates. This will help you determine a monthly payment that can be comfortable integrated into your budget.

Types of Mortgage Programs.

Most lenders are committed to ensuring that your home financing experience is rewarding and effortless. To this end, there are many programs available to suit a variety of situations, lifestyles and your financial profiles. These include:

Fixed-rate loan. If you've found a home you plan to live in for 10-30 years, consider a fixed-rate loan. It's predictable and stable since the interest rate is set for the full length of the loan. Because the monthly payment for the principal and interest stays the same for the life of the loan, it's easier to plan a budget. Most lenders offer many fixed-rate loans with terms to fit your budget, including loans that require no money down.

Adjustable-rate loan.

If you plan on being in your home for a shorter period of time, or expect your income to increase of the years, an adjustable-rate mortgage (ARM) may just be the right fit for you. An ARM loan usually starts with a lower initial interest rate than traditional fixed-rate loans. After a set initial payment period (usually one, three, five, seven or ten years), the interest rate may change periodically (usually annually or semiannually) based on market conditions. As the rate changes, your monthly payment changes. ARM loans feature an adjustment "cap" which limits how much the interest rate can go up. This helps protect you from large increases in your monthly payment.

Loans for first-time homebuyers.

Most banks offer affordable loans to make it easier for first-time homebuyers with limited savings to qualify for a home loan. Specifically, FHA and VA government loans are available to qualified buyers, based on income or property location. These affordable financing programs can help make it easier to buy a home since they require little or no money down and also offer flexible credit and income guidelines.

Repayment schedule.

Also consider how quickly you'd like to repay your loan – within 15 years, 20 years, 25 years, 30 years? Do you want to make biweekly mortgage payments? Typically, the sooner you repay the loan, the more you'll save in interest payments. However, the longer you extend the term of your financing, the lower your monthly payments maybe. So when choosing a loan term, consider your budget, your long-term spending patterns, your income over the life of the loan and how long you plan to stay in your home.

Which loan is right for me?

The lifestyle situations below can help you decide which loan you might want to consider.

"Getting the lowest monthly payment is most important to me, and I'll be in my home for less than five years."
An intermediate ARM (five years or longer) if your income is fixed or expected to decline.
A short-term ARM (three years or less) if you expect your income to increase.

"Getting the lowest monthly payment is most important to me, and I'll be in my home for more than five years."
A fixed-term mortgage (for example, 30-year fixed).
An intermediate ARM if you expect your income to keep increasing.

"I have little money saved for a down payment."
AN FHA loan.
A VA loan, if you are a veteran.

"I have no traditional credit references (for example, car loan or credit cards) but I pay my rent and other bills on time."
An FHA loan.
A VA loan, if you are a veteran.

"Paying off my mortgage faster and saving money by paying less interest long-term is what's most important to me."
A shorter-term mortgage, such as 15- or 20-year fixed-rate loan.
A biweekly 30-year mortgage accelerates the reduction in principal by applying more than one extra payment a year, reducing the total interest and term of the loan

Borrowers Protection Plan

Borrowers Protection Plan is an optional feature of your loan that can provide peace of mind during difficult times – like an unexpected job loss or disability. Borrowers Protection Plan will cancel your monthly principal and interest payment should you lose your job or are unable to work due to illness or injury. Borrowers Protection Plan may cancel a total of up to 12 months, depending upon the protection option and benefit period selected. And if you should die in an accident your entire loan balance will be canceled.

Benefits of protection.

Affordable. Decide what you and your family need and we'll help make it affordable.

Easy to obtain. There are no health requirements or medical exams and any size loan qualifies.

Supplemental benefits. Your monthly benefits will not be reduced because of other state unemployment benefits or disability income you may receive.
Protection options available prior to loan closing include involuntary unemployment and disability and can be purchased individually, or as a combination. These options also include accidental death protection and are available on a single or joint basis.

Fast answers and streamlined processing. The approval process should be fast and simple. Many homebuyers who have excellent credit history can be approved for a mortgage at the time of the application and with very little documentation.

Hassle-free mortgages with 80% less paperwork.

Use a proprietary process to determine if you qualify for this streamlined loan feature. This means less digging, sorting and collecting paperwork for you.

Your qualification for reduced paperwork depends on a number of factors:
Strong credit — doesn't have to be perfect
Type of mortgage you choose — many mortgage types and loan amounts up to $750,000 are eligible
Even if you don't qualify for the 80% less paperwork mortgage feature, your mortgage request can still be approved.

Buying a home is one of the most important events in your life. So talk to the mortgage professionals, do your homework and select a loan that fits your lifestyle and your budget. And enjoy the satisfaction of owning your own home.

Mortgage Free In 15 Years!

2009-03-12T02:34:00.001-07:00

Imagine paying your mortgage off in 15 years! Think of all the great things you could do with that extra money. What would you do? Retire early? Buy an R.V.? Travel around the world? If you could eliminate your mortgage in half the time, then your options would be wide open.

Let's take a look at 3 benefits and 3 considerations when evaluating whether or not the 15 year fixed rate mortgage, is right for you:

Lower Interest Rate
Huge Savings on Interest Paid
Mortgage Paid in 15 Years
Affordability
Expendable Income
The 15 Year Loan as an Investment

1. Lower Interest Rate:

The 15 year amortized fixed rate loan carries a lower interest rate.

The interest rate is usually about ½ % the rate of a 30 year term.
For example, as of today's date, the average 30 year fixed is going for about 5.67%, while the average 15 year fixed is going for about 5.10%.
That's a savings of .57%!

2. Huge savings on Interest Paid:

Do you want to save a ton of money? A 15 year fixed will accomplish this for you.

Let's look at a $300,000 loan. Over the course of 30 years, at 6% interest, you will pay the bank $347,514 in interest. (Yes that's right. You're paying the bank 115% of the loan value, over the course of 30 years).
However, with a 15 year fixed rate loan, at 5.5%, you will only pay $141,225 in interest (Wholly smoke! That's a savings of $206,289!).

What would YOU do with $206,289?

3. Mortgage Paid in 15 years:

Because the loan is amortized for 15 years, instead of 30 years, your commitment to the bank is cut in half.

This is an enormous advantage. After 15 years, money normally applied to a house payment can be applied to investments.
Or, you can begin considering alternative careers, retirement, or home improvements.
Or you can just spend that extra money on fun stuff and goodies.

Any way you look at it, cutting your commitment down to 15 years affords you many more options in life.

So we've established that a 15 year loan clearly has some amazing benefits. But, is the 15 year loan right for you? Let's take a look at some important considerations:

4. Affordability:

Even though the 15 year fixed rate loan enjoys a ½% savings in interest, there is still the question of affordability.

For example, a $300,000 mortgage, amortized over 30 years at 6%, equates to a monthly house payment of $1798.
But the same loan amortized over 15 years at 5.5%, equates to a monthly house payment of $2,451.
That's an extra $653 per month, or a payment that's 36% higher than a 30 year fixed.

Can you afford the long-term commitment of a 15 year fixed rate loan?

5. Expendable Income

The 15 year fixed rate loan is an important consideration if you have extra income and you are looking to apply it somewhere. Ask these important questions:

Are all your bills getting paid?
Do you have low debt?
Are you spending too much each month on luxuries?
Are you spending too little each month on productive investments and savings?

If money's got you down, and things are tight, and if there are other financial areas for you to explore first (such as paying off credit cards), then perhaps the 15 year loan may not be right for you, at least not right now.

Start by completing a budget analysis, and figure out a plan to get you from point A to point B.

6. The 15 Year Loan As An Investment:

This is really, the most important consideration. A 15 year fixed rate loan is more of an investment then anything else.

The financial benefits of a 15 year fixed rate RIVALS the benefits of a 401k, Roth IRA, and Mutual Fund performance.
You need to compare the money saved (in our example, that's $206,289) to the performance of your other investments in your portfolio. Remember to calculate in the extra money you are paying for the 15 year loan (in our example, that's $653 per month), so that you can determine a net profit.
If you are exploring ways to build wealth, and apply your money in a productive way, then you need to seriously sit down, and figure out how to get a 15 year loan incorporated into your plan.

Remember, money saved, is money earned!

We've enjoyed providing this information to you, and we wish you the best of luck in your pursuits. Remember to always seek out good advice from those you trust, and never turn your back on your own common sense.

Publisher's Directions:

This article may be freely distributed so long as the copyright, author's information, disclaimer, and an active link (where possible) are included.

Disclaimer: Statements and opinions expressed in the articles, reviews and other materials herein are those of the authors. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. The author will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

About The Author

Copyright 2005, by LoanResources.Org , This article is available in full format at: Mortgage Free , Tom Levine provides a solid, common sense approach to solving problems and answering questions relating to consumer loan products. His website seeks to provide free online resources for the consumer, including rate-watch, tips and articles, financial communication, news, and links to products and services.

Article Source: http://EzineArticles.com/?expert=Tom_Levine

Bad Credit Mortgage Lender - What to Look For

2009-03-11T13:42:00.001-07:00

If you have less than perfect credit and are looking to get approved for a mortgage loan, be careful not to make some common, costly mistakes. When dealing with sub-prime mortgage lenders or bad credit mortgage lenders, many people are taken advantage of because of their eagerness to get approved.

Choosing and settling on a mortgage lender or mortgage broker is a very important decision. Make sure you don't make mistakes that you will regret later.
Ask yourself, the mortgage broker or lender these questions before you sign on the dotted line:

1. Is there a pre-payment penalty on the loan? Ask about this as soon as you are told you are approved. A 6 month pre-payment penalty is probably ok, but 1 year, or two years? Over 1 year is too long. Find out how much the pre-payment penalty is. Maybe its not much. But if there is one, its most likely to be so much, that it would defeat the purpose of refinancing the loan before the penalty time is up. If you are get a mortgage loan with a poor credit score, and then make your mortgage payments on time, you are likely to be able to refinance in 6 months to 1 year for a much better interest rate. You don't want to hurt your chances of doing that with a heavy pre-payment penalty. Sometimes brokers will neglect to tell you about one.

2. What will the interest rate be? Sounds obvious, but lock down exact numbers. Don't settle for vague answers on this. Brokers may promise you a low interest rate, but as it gets closer, end up locking you in at a much higher rate. If you are doing a combo loan, 80/20, the second mortgage may end up being the one that has an interest rate that surprisingly jumps up as it gets close to the loan closing. Try to negotiate a lower interest rate, especially if you are going through a mortgage broker, they will usually have some play in this area.

3. Is my mortgage broker being too pushy? If you feel your broker is being too pushy, there may be something in the loan that is not in your best interest. Ask a lot of questions and don't be afraid to start searching elsewhere. When getting a mortgage loan, you don't want to be in too big a hurry.

4. Can I afford the payment even I am not able to refinance for a lower rate within 2-3 years? Many people get into a sub-prime mortgage loan with a higher interest rate, just because they are happy to get approved, only to feel suffocated later, when they cannot refinance and get out from under the high payment. If you don't think you could make the payment for at least the next 2-3 years with no problem, then you shouldn't be getting into the loan.

5. What are my closing costs going to be, exactly? Bad credit mortgage lenders and mortgage brokers know that the person they are extending the loan to doesn't have as many options. These lenders and brokers can sometimes take advantage of that fact by upping the fees at closing. Make sure you see what all of your fees are going to be in writing before you commit to the loan. Compare those fees with other lenders and make sure they are comparable. If there are a little high, try negotiating with your mortgage lender or broker. They will usually be able to make changes there if they choose to.

It helps to choose a bad credit mortgage lender based on a
referral based on a referral, one who has a good reputation. Choose a company with a long standing reputation and make sure you feel comfortable working with them.

There are many lenders now, who specialize in bad credit mortgage loans. These are the best lenders to start with.

Written by Carrie Reeder, owner of http://www.abcloanguide.com, an informational website on mortgage loans, with articles and lists of recommended bad credit mortgage lenders.

Article Source: http://EzineArticles.com/?expert=Carrie_Reeder

Mortgage rates are still too high

2008-12-29T01:13:00.000-08:00

Mortgage rates have dropped a lot in recent weeks, which is a good thing. But there’s still a huge spread between mortgage rates and rates on federal debt. Here’s the spread between conventional 30-year mortgages and 10-year Treasuries (10-year because most mortgages get paid off early, when houses are sold, and the average duration is about 10 years.) This spread was historically stable at about 150 basis points, but has been nearly double that lately

Why is the spread so high? Presumably because investors are still seeking the safety of government bonds. But what’s bizarre is that these days the government is the dominant mortgage lender, in the form of Fannie and Freddie, which have been nationalized for all practical purposes.

The persistence of the spread offers one opportunity for quick economic stimulus: declare that Fannie and Freddie are backed by full faith and credit, and if that doesn’t work, have the Treasury borrow on their behalf. This can bring mortgage rates down by more than 100 basis points. By itself, that’s not nearly enough to turn the economy around, but it could really help the economic recovery package.

source nytimes.com

Cash Loans for Unemployed: Designed for Needs of Unemployed People

2008-10-29T08:48:00.000-07:00

Getting a loan is very easy if a person has a regular source of income. But same is not true for unemployed people. Lenders in general are reluctant to provide loans to unemployed people. So isn't there any way through which unemployed people can meet urgent requirements? The answer is cash loans for unemployed.

The most important characteristic of cash loans for unemployed is the speed and swiftness with which they are disbursed. These are mostly unsecured in nature which implies no collateral has to be placed against the loans amount. Moreover credit ratings are also not given much attention.

The amount associated with these loans is not much with these loans which can stretch up to $1500 and these are very short termed loans. These loans do what payday loans do for employed persons. As payday loans suffice the employed persons with money between two paychecks so do cash loans for unemployed since they provide money for the brief phase of unemployment.

There are some advantages which need a mention. They are as follows

" Theses loans are available to bad credit borrowers.

" No discrimination is practiced concerning employed or the lack of it which nullifies the general perception.

" These are very swift to avail and in most of the cases the amount is disbursed within 24 hrs.

Repayment is an issue one should not casually deal with. Because faltering in it may prove as a blockade if one requires money from loaning market in future.

Cash loans for unemployed can be found online or in the physical market. However online procedure eases all the process of availing loans as everything can be managed sitting before a computer.

Get More Information Read The Credit Secrets Bible - Secrets Everyone Should Know

Bad Credit Loans: All Your Wishes Come True!

2008-09-02T08:33:00.000-07:00

Nothing is permanent in life, including finding yourself in a bad financial situation. You can have a bad credit rating due to several factors, such as loss of job, irregular and late repayments, and credit card debt. In such a situation, bad credit loans are like an oasis in the desert providing the much-needed money for your various needs. Bad credit loans can be used for emergencies due to hard financial circumstances or for leisure. Moreover, such loans are available even to those people who have bad credit or no credit.

Anyone can face credit problems at some time or the other in his/her life and bad credit can happen at any time due to various factors. Even the most financially sound people can suffer from bad credit and if this happens, you should try to get a bad credit loan to tide over your financial predicament.

There are two types of bad credit loans: secured bad credit loans and unsecured bad credit loans. Consumers prefer the unsecured type as they do not have to put up any guarantee, although both the types are popular.

In the case of a secured bad credit loan the borrower has to put up some property like a house as a guarantee against the loan. This is a very risky proposition as the borrower can lose the property in case of default in the repayments of the loan. Moreover, if the borrower does not make payments on time, the interest rates would also go up considerably.

An unsecured bad credit loan, on the other hand, does not need the borrower's asset as a guarantee against the loan. Normally the borrower can get a loan of tens of thousands of dollars. The lender would, however, scrutinize all the credit card bills of the borrower before granting the bad credit loan.

Bad credit loans are offered by many banks, credit unions, business merchants and financial institutes. As such, if you need money for buying a house, a car or for any other financial exigency and if you do not have a good credit report, you can easily get a bad credit loan to fulfill your needs.

Applying for a bad credit loan is not at all difficult and things have become much faster due to the Internet. There is no need anymore to go to a lender nor do you need to stand in long queues to talk to the lender. All that you have to do now is to click on your mouse and a multitude of websites will be available for you to study and decide the one for getting a bad credit loan. Many loan schemes will be available on the net and it is necessary for you to study the terms and conditions of each agency. When you have selected the right agency, you should fill up the online application form. A loan officer will assess your form and will let you know by phone or e-mail about the approval of the loan. If your loan is approved, the money will be credited to your bank account.

As there is no asset to guarantee an unsecured loan, it is normally in the form of homeowner loans or tenant loans. Moreover there is greater risk to the lender in the case of unsecured loans as there are no assets which the lender can claim in case of default by the borrower. It is for this reason that lenders normally charge a very high rate of interest for unsecured loans.

Before choosing a bad credit loan, it is better for the borrower to shop around a bit in order to find a very good deal. Moreover, it is advisable to consult a specialist who can guide you properly and give valuable suggestions so that you are successful in your quest for a loan.

get your credit secrets bible and help yourself out of debt within 6 months

six super mortgages

2008-07-25T11:24:00.001-07:00

There is no such thing as the best mortgage, or even the best type of mortgage. On this website and others you will find contradictory articles and advice debating the issue. Some people think tracker mortgages are the best thing since sliced bread (myself included) while others believe that fixing now is the right course of action (and they are wrong).

Ultimately, it doesn’t matter what any of us think, because the right mortgage is the one that suits your needs, your attitude to risk and your financial circumstances.

There is absolutely, categorically, in no way whatsoever a best mortgage.

However......

There are some good deals within their categories and below is a selection of six of my favourites. I can guarantee that Fools will be able to find some deals with lower rates than my choices. In some cases I have gone for a good balance of rate, loan-to-value and upfront fee to suit those with more modest mortgages. Those products with incredibly low rates are probably more suitable for large loan borrowers, or they are only available to people with a whopping deposit.

There’s a mix of fixed, trackers and discounted rates, none for those with a bad credit history (that’s a whole other feature) but a few self-cert deals.

They are all available at time of writing but in the current market they may not be about tomorrow.

The tracker
My pick of the bunch. HSBC has a lifetime tracker at 5.99% (0.99% above Base Rate).

It comes with no arrangement fee and unlimited overpayments are allowed. Plus it’s portable and is available to those with just a 10% deposit. It also has no early repayment charges. What more could you want?

Well, if you want a similar deal at a slightly lower rate, Woolwich’s fee-free lifetime tracker is currently 5.89%. However, you need a 40% deposit to secure this one.

The discounted variable rate
Again HSBC leads the field on discounted variable rates with its 5.69% two-year discount, reverting to a (current) rate of 6.25%. Available to up to 90% loan- to-value this is suitable for first-time buyers or those with little equity in their property and comes with a teeny weenie £249 fee. If you want an even better rate and you can afford to pay a fee of £2,499, HSBC is offering a two-year discount at just 4.99%, or one at 5.49% with a £999 fee.

The short-term fixed rate
First Direct’s two-year fixed rate of 5.98% is a good rate but with a high-ish fee of £1,499 plus £499 booking fee. It’s available to those with a 20% deposit and is an offset mortgage so customers can use savings and current account credit to offset against their mortgage debt. The bank also offers a slightly higher rate -- 6.39% in exchange for a much lower fee of £399 plus £99 booking fee.

Market Harborough Building Society has a great two-year fixed rate, low fee deal. Its 5.99% two-year fix is available up to 80% loan-to-value on mortgages up to £300,000 with an arrangement fee of £749.

The long(er)-term fixed rate
Fixing for the longer term at today’s high rates is an option that few borrowers will currently be comfortable with, but if that’s what you fancy my money is on Leeds Building Society’s low rate five-year fix at 5.99%. Available to those with a 20% deposit it carries a £1,499 fee and is available on mortgages up to £250,000.

If you have a small deposit still but want a long-term fix, Britannia Building Society’s five-year rate of 6.74% goes up to 90% loan to value, with a low fee of £499.

The large loan
Stealing the march on large loans at the moment is a Charcol exclusive at just 4.99% -- that’s right, under 5%. This loan is targeted at extremely high-net-worth borrowers -- £500,000 minimum to £5m. In addition it comes with a stinger of a fee, 2.75% of the loan, which will amount to tens of thousands of pounds. But if you are borrowing big, it could be worth it for the excellent rate. Another stipulation is that you need a 35% deposit.

For a large loan with a much smaller fee Bank of Scotland has a three-year tracker at 6.19% with a fee of just £1,499. It is available to those with a 25% deposit or more on loans over half a million pounds, and must be arranged through a mortgage broker.

The self-cert deal
Self-cert deals, for those who cannot or prefer not to have to prove their income, are much more expensive than mainstream deals.

Bank of Scotland’s five-year tracker is competitive at 6.69% up to 75% loan to value, and comes with a fee of £999 of the loan, which is not bad at all for self-cert lending.

Fixed rates come in at around 7.39% and Bristol & West offers a five-year fix at this rate with a 1.5% fee. Again you’ll need a 25% deposit. The lowest self-cert rate I could find was a two-year tracker at 5.99% from Nationwide brand The Mortgage Works (available through brokers) but comes with a whopping 2.50% fee and you need a 50% deposit.

source http://www.fool.co.uk/news/property-home/mortgages/2008/07/17/six-super-mortgages.aspx

Is Your Credit Score Costing You A Fortune?

2008-03-15T08:42:00.000-07:00

While some surveys show that 9 out of 10 consumers are unaware what their credit score is, I'd like to quickly share with you how your credit score could be costing you a fortune (in more ways than you can imagine).

We all know a low credit score will make everything in the world of finance more expensive because of higher interests rates from lenders due to being considered a greater credit risk (i.e. higher interest rates on cars, homes and credit cards). While this may be considered common knowledge by some, it's truly devastating effects are understood by few.

For example. If you purchase a $200,000 home on a 30 year fixed mortgage at 8% interest instead of 6% (because of your credit score); that 2% is going to end up costing you a total of $96,934.11 over the term of the loan. Now, think about how many extra years you'll have to work to pay off $96,934.11 because of an extra 2% in interest?

The part few people talk about is all the other areas in life where a low score will increase your cost of living on an annual basis. For example. In addition to paying more for a car, home and credit cards, a low credit score will most likely have you paying more for the following as well:

1.) AUTO INSURANCE. As many as 92% of the 100 largest personal automobile insurers use credit information to underwrite new business, according to a 2001 study by Conning & Co., an insurance-research and asset-management firm.

2.) HOMEOWNERS INSURANCE. It's thought many insurance companies see a correlation between low credit scores and increased property insurance claims. Therefore, a low score will result in a higher rates.

3.) LIFE and HEALTH INSURANCE. Customers who are unable to pay their monthly insurance premium thereby pass along that increased cost to the insurance company whose stuck with the bill (resulting in a loss for the company). Since customers who pay without lapse are more profitable it is felt by many that a low credit score now even affects a monthly life and/or health insurance premium negatively.

One of the more shocking areas where a low credit score will you cost you is in the area of employment. It's estimated as many as 42% of employers now do credit checks on applicants before hiring them (according to a 1998 survey by the Society for Human Resource Management).

While many employers claim they only do it to verify information on your application (such as where you live and where you have worked etc.) we can both assume they are taking the liberty to have a peek at how you handle your financial affairs as well. According to the Public Research Interest Group (PIRG) as many as 79% all credit reports contain errors, 25% of which are serious enough to cause the denial of credit (according to a 2004 report).

And that's all the more troubling in light of the increasing impact a bad credit report can have, says Ed Mierzwinski, director of PIRG's consumer program. "It's outrageous that the credit bureaus are claiming their scores are accurate enough to take people's lives and screw with them like this".

The "CREDIT SECRETS BIBLE"
has been in print since 1994 and is published by Consumer Publishing Group. For more information visit: "CREDIT SECRETS BIBLE"

Facts You Should Know BEFORE Considering Credit Counseling or Debt Consolidation

2008-03-07T03:32:00.000-08:00

There is one topic which every time I write about it seems to generate some hate mail while at the same time spawning a flurry of wonderful praise from consumers. Of course, the hate mail is always from a few people that happen to own these "certain types" of businesses I discussed and those businesses of course are Credit Counseling or Debt Consolidation companies; of which many "claim" to be non-profit organizations.

You'd almost have to be an ostrich with your head stuck in the sand to not see or hear at least one advertisement a day from a Credit Counseling or Debt Consolidation Company. However, you can expect this to change and change soon. Since this is a topic which tends to "stir up" the owners of these businesses, I am going to take a different approach by NOT sharing my opinion, but rather, the opinion of others. I will start with the news media and the Internal Revenue Service:

"(NPR News, May 15, 2006). The Internal Revenue Service is revoking the tax exempt status of some of the largest credit counseling agencies in the country. An IRS investigation disclosed that the firms solicited business from people seriously in debt and that they didn't provide counseling or consumer education, as required.

Prodded in part by a congressional oversight committee and consumer advocates, the IRS began investigating dozens of credit counseling agencies -- most holding non-profit status -- two years ago. IRS Commissioner Mark Everson says the companies "poisoned an entire sector of the charitable community."

Everson says in many instances, companies were organized merely to funnel business to loosely affiliated for-profit companies. Many of the firms spend millions of dollars on commercials that urge anyone with debt to call them to solve their financial woes. And because tax-exempt organizations are not bound by the federal do-not call list, the firms were able to randomly call consumers, pitching their services under the guise of a non-profit counseling service.

The IRS investigations are also likely to affect consumers, thanks to a new bankruptcy law that requires consumers considering bankruptcy to get counseling before they are allowed to file. The IRS wants to ensure that only legitimate non-profit agencies are doing the counseling. In addition to the actions announced Monday, the IRS is sending more than 700 compliance letters to the rest of the credit counseling industry .

Since almost all Credit Counseling and Debt Consolidation companies claim a non-profit status, I feel most consumers are easily sucked in with their skepticism and defenses at bay. After all, when most of us hear the word "non-profit" the first thing we usually think of is a church or homeless shelter.

From the NPR article and the actions of the IRS, I think it's fair to assume that many of these "non- profit" organizations have been operating under a scenario similar to that of a wolf guarding a hen house. However, this doesn't mean all credit counseling and debt consolidation companies are bad but... you do need to know the truth about how they operate and their limitations.

The first thing you want to understand is these companies are ALL more interested in making money off you than they are in preserving your credit rating. The bottom line with either credit counseling or debt consolidation is that it absolutely ruins your credit. I can just hear the companies arguing this with a consumer right now, telling them nonsense like "It helps your credit since it tells creditors that you're working on your situation and not just running away from it." Listen... if one these places tells you that than watch out. Why? Because they will lie to you about other things as well!

One of the first actions these programs usually requires you to do is for you to CLOSE all your revolving credit accounts. You then make payments to the organization and they take care of everything for you. What this says to all your creditors (as well as anyone considering giving you credit) is that you are so out of control with your finances that you can't even manage paying everyone back on your own. Therefore, you're hiring someone else to do it for you!
99% of the time these companies will claim they can negotiate with your creditors and get interest rates reduced thereby saving you money. While this is true, what's also true is you can easily negotiate these same rates as well as they can by just calling your creditors yourself.

You'd be amazed at how many of your creditors would love to hear from you (especially when the chips are down!). Not too mention, any money the counseling company was to save you would more than likely be sucked back up by their monthly fees (usually around $500 to $1,000 per year).

This brings us into a whole other dynamic of their business model. Because these companies always make their money off of monthly fees paid by the consumer, the longer they can keep those monthly fees coming in the more profitable their business will be. It's for this reason that most consumers who sign up with these companies usually find themselves on payment plans with the lowest monthly payment possible (which turns out to also be the LONGEST payment plan as well). Not surprising is it?

Am I against Credit Counseling and Debt Consolidation companies? Absolutely not. After all, there are millions of people in America who will never be able to manage their finances. Credit to them is a destructive addiction much like alcohol or drugs and they will never be able to control it.

Instead, it will always control them. We've all seen these people. Every time they are extended credit shortly thereafter they are in financial trouble (usually blaming it on some external factor). For these people I think these credit and debt counseling programs can be a good thing (as a ruined credit report is not a hindrance to them but actually an asset). It keeps them out of future financial trouble by forcing them to live their lives on a "cash and carry" basis; which is ultimately conducive to a better standard of living down the road.

On the other hand. If you're good with your finances and have control with credit but went through some type of hardship beyond your control in the past (i.e. divorce, job loss etc); then the services of these companies will never be for you. You will do far better and preserve your credit rating by taking matters into your own hands. Reason being is that you understand your credit rating is a powerful tool that can help you move ahead faster, help others and help yourself as well as create the life you want. It all comes down to self management. We all know that those who cannot manage themselves will ultimately be managed by others. Credit is no different. When you learn to manage it well, you are the master and it is the servant.

If you care about your credit and want to benefit from it in the future, then you will never rely on a credit or debt counseling service to help you get out of any trouble you find yourself in.

Instead, you'll look inward and get yourself out while preserving your credit rating the best you can. Credit and debt counseling is for people who are "ok" with throwing their credit rating in the trash so they can have "someone else" manage their payments for them (since they are unable to manage them themselves). And again, as far as negotiating interest rates, you can do just as good as them or better. If you don't believe me just call any of your creditors and straight out tell them your situation. You will quickly find you don't need to be afraid of them. They just want to get paid like the rest of us.

The "CREDIT SECRETS BIBLE" has been in print since 1994 and is published by Consumer Publishing Group. For more information on the "CREDIT SECRETS BIBLE" you may visit:

Killing Credit Cards With A Loan

2008-03-05T16:11:00.000-08:00

Thanks to a worldwide credit crunch and mounting bad debts, banks and building societies have started to curb their lending. They have withdrawn thousands of mortgages, increased interest rates on personal loans and credit cards, and started to reject far more applications for credit.

I see this as only the beginning of an even harsher clampdown on credit, as lenders tighten up their lending criteria and improve their risk management. Thus, I believe that now is an excellent time for us to wean ourselves off our credit habit. In particular, I think it's high time that we abandoned ‘plasticmania' -- our addiction to spending on credit cards.

For the record, we have around £55 billion of outstanding debt on our credit cards, which comes to exactly £2,200 per household. However, this is only an average, and millions of credit-card users have far higher balances. Indeed, some visitors to our Dealing with Debt discussion board owe £50,000+ on their plastic. Ouch!

Credit cards are useful for short-term borrowing, especially if you avoid interest by paying them off in full every month. However, because of their high interest rates, they are an expensive way to borrow over periods exceeding a year. (Unless you use a 0% credit card, of course!)
Thus, if you're looking to borrow over several years, then a personal loan is usually a much better bet than a credit card. This is because interest rates on personal loans are considerably lower

article source http://www.fool.co.uk

Over half of UK repossessions in sub-prime sector

2008-03-05T00:58:00.000-08:00

According to a recent report over half of repossession order that are brought in the UK come from sub-prime lenders, who are lenders that specialise in giving credit to those with bad credit or no proof of income.

Sub-prime lenders have come under fire in the past because of the high rates of interest that they charge on loans to consumers that already have financial problems.
A spokesperson from one sub-prime lender said: “It should come as no surprise that those lenders dealing with borrowers with past credit problems are likely to have to deal with more cases of default amongst their borrowers. Comparing lenders like GMAC-RFC with high street lenders is a bit like comparing apples and pears.”

However, the lenders are quick to point out that not all of the orders actually result in repossession, with one sub-prime official stating: “The figures are based on possession claims hearings and are therefore not representative of actual repossessions, which are a lot lower. Of proceedings started, where solicitors become involved, five out of six are resolved without having recourse to repossession.”

In a recent study of twelve hundred recent orders that went through the courts it was found that 10% of these were brought by two sub-prime lenders, GE Money and GMAC-RFC

The TRUTH About Credit Repair...

2008-03-04T10:36:00.000-08:00

Have you ever wondered what companies send you when they claim you can erase bad credit overnight? How about those ads that say you can get any major credit card without a deposit or a credit check?

Ads abound almost everywhere these days (online and off) selling books, systems and secrets to help you fix your credit. Many of these programs have claims which read like the covers of supermarket tabloids:
"In 3hrs my credit score jumped from 580 to 676!"...
"Erase bad credit and smash your debts with just 2 Magic Letters!".

Are these types of claims ALWAYS too good to be true? The answer is "Yes and... no".
While many people would love for you to believe the only thing that can fix bad credit is time; in reality... nothing could be further from the truth. The fact is, time is only one factor which can fix a credit report, but it's a far cry from being the only factor. How can I back this up? Easy.
Under a consumer protection law known as the Fair Credit Reporting Act (a.k.a. the FCRA) the only negative information which can remain on your credit report is not what is accurate... but what can be proved as accurate under the FCRA. What's this mean to you?
It means any negative item on your credit report can only remain there if it is accurate and CAN BE PROVED AS SUCH under the guidelines of the FCRA. This undisputable fact presents consumers with both good news and bad news.

The good news is that through the FCRA your credit score can most likely be improved dramatically in a very short period of time with only a modest amount of effort on your part.

The bad news is that while the actual "work" will take very little of your time, it is vital that you have good information on "how" to go about it. This is the bad news; 9 out of 10 courses on restoring your credit will do nothing more than lead you into snake pits because they will provide you with what the industry refers to as "Boiler Plate" dispute letters. These are nothing more than form letters and... quite frankly (more bad news) the Credit Bureaus and Creditors will laugh at you if you try to use them.

While I agree with the Federal Trade Commission (FTC) that "Anything a Credit Repair Clinic can do for you legally, you can do for yourself at little or not cost"... the key element you need for success is the latest inside techniques and procedures to get the results you want. This involves strategies such as "Proof of Contract", "Constructive Notice", "Challenge of Procedure" or"Restrictive Endorsement" and many others.

All these terms may "sound" impressive but they are really quite simple. In the end, it is nothing more than a method of communication which exercises your consumer protection rights, gets the results you want and raises your credit score.

The "CREDIT SECRETS BIBLE" has been in print since 1994 and is published by Consumer Publishing Group.For more information visit the "CREDIT SECRETS BIBLE"