Four Tips on How People with Poor Credit Can Get Mortgage Loans

While it is easy for people with good credit to get home loans, those with bad credit find it difficult, especially in conjunction with the present economic situation. For borrowers with bad credit, it can be nearly hopeless to get a home loan, unless you prove to the lenders that you abide by the repayment terms. The following are four tips that will help people with bad credit get home loans.

First, look for the best real estate deal by consulting trustworthy brokers, who will assist you in finding a reasonably priced house you can pay for. Moreover, you must inform the broker about your current credit status so that they can look for the most suitable house that is within your means.

Second, save a sufficient amount of money for a deposit. There are a few lenders who will approve you a loan in spite of a low credit score and if you pay a large deposit, you will be charged with lower interest rates. The higher the deposit you pay, the more chances of getting approved for a loan, and the lower you will have to pay every month.

Third, show off your other assets, especially if you do not have money to pay a large deposit, because it will further convince the loan officers to approve your application. For example, indicating your life insurance with cash value on the home loan application will guarantee lenders that you have another source of money. This will be of great help when the time comes that you cannot pay your mortgage.

Fourth, increase your credit score because having such will make it a lot easier for you to get loans someday and you can also get the loan you want charged at a lower interest rate. One way to increase your credit score is to pay your debts on time.

Although you have a poor credit rating, there are still a lot of online sites that offer inexpensive loans for those with poor credit. However, you must be ready to be charged with high interest rates on the loan because it is a consequence for having a poor credit history.

Six Tips in Getting a Car Loan

If you are planning of buying a car but you do not yet have money to finance one, then a car loan is the right option for you. The following are six tips that will help you get the perfect car loan.

First, check your credit score. Check if there is anything you must resolve, because having a low credit score will eventually have an impact on your loan interest rates. While people with bad credit can still get a car loan, they are more likely going to be charged with higher interest rates.

Second, identify your budget prior to picking any car loan. Select a loan that you know you can effortlessly pay back monthly. Moreover, monitor your budget and work out how much you can pay every month for your car loan after paying all your everyday expenditures, and accordingly pick a loan.

Third, make a comprehensive assessment of the whole payment policy, taking note of the loan amount, down payments, and monthly payments you need to pay. Going for a lower deposit at the present time might increase your costs in the future. Therefore, opt for a payment policy such that you can handle the current and upcoming payments with ease.

Fourth, look for an insurance coverage in your car loan policy. Besides being a legal requirement in the United Kingdom, it can save you from financial difficulty if any unforeseen expenses come up or there are damages because of accidents.

Fifth, seek different lenders and their different offers as well. As a result, you have a lot of options to choose from and you can pick the most appropriate car loan for you.

Sixth, keep away from prepayment policies. Select the loan that has a flexible payment policy, which can allow you to either make extra payments or pay the whole loan amount without having to pay for penalties.

Analysis of Reverse Mortgages

A lot of senior Americans are discovering that although they are free from mortgage, they are poor in terms of cash. As a result, a reverse mortgage came about. This type of mortgage let people aged 62 or above to loan money against their home’s equity.

A reverse mortgage differs from the normal home loan because it does not require a payment unless you move, sell or die. It is the most appropriate home loan for those who plan to stay at home for a long period of time. The loan will become less costly if you stay longer, since there are high upfront fees.

Unfortunately, based on the report from Consumer Financial Protection Bureau, which was forced to assess reverse mortgages as component of the Dodd-Frank financial reform act, this type of loans also has its own setbacks. However, reverse mortgages have a huge potential to be a significant part of the financial market in the near future.

One of the few issues concerning reverse mortgages that the bureau found out is a lot of people, especially the seniors, are not aware of the details of a reverse mortgage.

Another area of concern is that people are getting loans at a much younger age. In the previous year, more or less half of borrowers were aged below 70.

According to the bureau, getting a reverse mortgage prior to reaching retirement or early in retirement will increase the risks to consumers. Using home equity early on, borrowers might end up lacking financial resources to fund a future move. Moreover, CFPB discovered that as of February this year, 9.4 percent are at risk of foreclosure due to outstanding property taxes and insurance.

In addition, CFPB director Richard Cordray said that it is very crucial that consumers are aware of what they are applying for and that it is the best loan for them.

Lender Will Reject Mortgage Applications from Borrowers with Payday Loans

Applying for a payday loan can actually hinder the possibility of getting approved for a mortgage loan. In fact, GE Money Home Lending made a decision not to approved applications from borrowers with a background on recent payday loans. On the other hand, other lenders are still vigilant towards borrowers.

Although payday loans provide credit for a span of two to three weeks, it charges high annual interest rates. For example, a £100 loan might be charged with interest rate of between £20 and £30.

GE Money Home Lending will no longer approve applications of borrowers who have a payday loan in the last three months or who have had two or more payday loans in the previous year, even those who paid off their payday loans in full and on time.

This is because a lot of lenders perceive payday loans as an indication of financial difficulties. According to the spokesperson of GE Money, they assess a variety of data in order to make cautious decisions concerning mortgage lending, and that borrowers who have a current or previous payday loan will no longer be considered candidates for loans.

David Hollingworth from London & Country, a mortgage broker in Bath, Somerset, said that since having payday loans can mean the borrower is struggling from a financial problem, they are most likely seen as higher risks by the lenders.

Moreover, Brian Cole, chief executive officer of Capital One, said that having a payday loan, even if it’s already paid off on time, causes a negative impression on your credit report.

However, according to John Lamidy, chief executive officer of Consumer Finance Association, which is the organization for payday lenders, having a payday loan is not an indication that you are facing a financial trouble. Instead, it simply means the borrower needed a certain amount of money for a short period of time.

How to Restore Credit After Bankruptcy

While bankruptcy can have a negative impact on your credit, it also increase your credit because once you filed a Chapter 7 bankruptcy, your debt-to-income ratio will significantly increase. This is due to the fact that you no longer have old debt and more money can be used to pay new debt.

You can start rebuilding your credit by finding out the duration and type of your employment. It will be much less difficult to get new credit if you worked at the same job for a long period of time. However, having your employment history is only the first step in credit rebuilding.

You must remember the reason for filing a bankruptcy. If it’s something justifiable, for instance, illness or divorce, then you can still get a new credit. On the other hand, if it’s because of compulsive spending, gambling, drugs or alcohol, then you must first deal with these problems, otherwise, you cannot be a candidate for obtaining new credit.

After that, you can apply for a secured credit card, where you can put in money with a lender as security and the amount of deposit will also be your credit limit. A debit card is different because it has no credit lending component or credit history rebuilding record.

Furthermore, pay your current debt on time, for example, installment loans you might not have paid completely. This is very important, especially with secured loans like auto or mortgage loans, because every on time monthly payment will be reflected in your credit history and reported to the credit reporting agencies. Consequently, it will help in increasing your credit score.

Later, you can also get a store card from gas firm or department store, but keep in mind to use revolving credit casually and frequently.

The combination of credit cards, installment loans and store cards used and paid on time is one of the best ways to rebuilding your credit after a bankruptcy. It can be achieved for a couple of years, together with a decent employment history.