Boost Your Credit Quickly with These Simple Tips

Boost Your Credit Quickly with These Tips- 150x150Even if your credit is in what is considered to be a good range, boosting it a bit never hurts. Increasing your credit score becomes very important if your score is within the lower range. Living with a low credit score can be difficult, especially if you plan on buying a home or any other major asset. Repairing a credit score takes time and discipline, but there are ways in which you can raise your score quickly. You won’t be able to get over bankruptcy or foreclosure overnight, but the higher you can get your credit score, the more chances you will have of being approved for a loan. Here are a few tips that can help you quickly improve your credit score.

Use Your Credit Cards in a Smart Way

Having too much debt can hurt your credit score. Using more than 30 percent of your credit limit on your credit card can actually lower your credit score, so it’s better to pay off the larger balance and use other cards with a low balance instead. Spreading the debt among several credit cards is also a good idea, as long as you remember that you can end up paying a larger interest rate.

Check Your Credit Report for Errors

You are entitled to one free credit report check per year, so take advantage of it and look over it closely in order to find any errors or misinformation. Credit reports are usually pretty accurate, but it’s always a good idea to check. Even a small error which may not seem too important can hurt your score and affect the interest rates that you will receive, or even your ability to take out a loan.

When checking your credit report for errors, make sure that you look for any erroneous information on your payment history and credit limits, missed or late payments that were actually made on time, and billing disputes that you have won. Notify the credit bureau about any error, no matter how small it may seem. The bureau will open an investigation and resolve the issue within 30 days.

Pay Off Larger Balances

Having too much debt will surely affect your credit score in a negative way. Getting rid of some of that debt is helpful, especially if you can pay off larger debts. Generally, it is better to access some savings or investments in order to pay off some debt and increase your credit score, than to get a mortgage loan with a low credit score and end up paying thousands more in interest.

Ask Your Creditors to Forgive You

Unless you and your creditors have had multiple incidents, or you have a really big negative spot on your credit report, you can simply ask your creditors to remove a negative item from your report. This will probably only work with minor items, but having several removed can really help your credit score. Remember that removing an item from your credit report usually works better right after the incident, and not months or years later.

Negotiate With Your Lenders and Creditors

If you are able to pay off some debt, but don’t want it to show on your credit report, you can negotiate with your creditors. Ask them not to report the unpaid debt in exchange for you paying it off. Getting their money is more important for creditors than hurting your credit score, so they will usually accept.

These tips will help you boost your credit quickly, but you won’t go from bad credit to good or perfect credit overnight. Repairing your credit will take a few years, but doing everything in your power to help it recover is very important. So start by checking your credit report for errors, come to an agreement with your creditors and pay off some of your debt, and you will be on the right path to repairing your credit score.

FHA Mortgages: Pros and Cons

FHA Mortgages-Pros and Cons- 150x150The Federal Housing Administration (FHA) mortgages are designed to help people with lower incomes become home owners. Tight lending requirements make it difficult for people with low incomes, less than perfect credit scores, and tight financial situations to obtain a conventional loan. The Federal Housing Administration insures the mortgage loan against default, so in the event that the borrower can’t make mortgage payments anymore, the FHA will pay.

Pretty much anyone can qualify for an FHA mortgage loan, but the amounts that you can borrow are usually close to median home prices in the area. In order to qualify for this type of loan, your debt to income ratio should be fairly reasonable and you should have a good credit score.

FHA Mortgages- Pros

FHA mortgage loans are not for everyone, but they do have a few advantages over conventional loans. FHA loans make it easier for people who can’t normally afford a conventional mortgage loan to become a home owner. Here are the most important pros of taking out an FHA mortgage loan:

  • It is easier to qualify for an FHA mortgage loan than for a conventional mortgage loan. Conventional mortgage loans have strict qualification requirements, making it harder for people with low to medium incomes and not so perfect credit scores to qualify. FHA mortgage loans, on the other hand, are designed by the government to help these people, by having less strict income and credit score requirements.
  • FHA loans require a much smaller down payment than conventional loans. Regular mortgage loans require a 20 percent down payment in order to avoid paying for insurance. 20 percent of a loan value can be a pretty hefty chunk of money, depending on how much your mortgage loan is for. Down payments for an FHA mortgage loan can be as low as 3.5 percent, making it easier for more people to become home owners.
  • FHA loans don’t come with a pre-payment penalty. Many conventional loans come with a pre-payment penalty, meaning that you will have to pay a penalty fee if you decide to pay off your loan before the end of its term. FHA mortgage loans don’t come with such a penalty, so you can pay off your loan or refinance at any time.

FHA Mortgages- Cons

FHA mortgage loans are designed to help people who can’t otherwise afford a conventional mortgage loan. Because of this, FHA loans come with a few cons, as well. Here are the most important:

  • You can’t borrow as much money as you would with a conventional loan. Because the Federal Housing Administration insures these loans, they will have to pay in case the borrower defaults. That’s why the amounts that you can borrow are lower than what you would be able to borrow on a conventional loan.
  • Many sellers don’t want to deal with buyers using an FHA mortgage loan. When the housing market is hot, sellers in a sellers’ market receive multiple offers on their properties. FHA mortgage loans are seen as a hassle by sellers, so your offer might be refused just because the seller doesn’t want to deal with an FHA loan.
  • You will have to pay a mortgage insurance premium. Conventional loans require the borrower to pay private mortgage insurance if the down payment is lower than 20 percent. FHA insured mortgage loans require an initial insurance payment of 1.5 percent of the loan value, and a monthly mortgage insurance premium of .5 percent of the loan value.

Mortgages backed by the Federal Housing Administration are a great way for those with lesser means to become home owners. Depending on each borrower’s situation, this type of loan can be a good or a bad choice. It is up to the home buyer to evaluate his or her financial situation and decide if an FHA loan is the best choice, or it would be better to look for a more conventional loan.

Top 10 Refinance Lenders for Borrowers with Bad Credit

Top 10 Refinance Lenders for Borrowers with Bad Credit-150x150Getting a mortgage loan with bad credit is difficult, but doable. Lenders typically regard people with bad credit as a high default risk, but they are willing to help every borrower as much as their lending requirements permit them. The same applies to refinancing, where borrowers might want to take out a new loan and possibly receive a better interest rate. Unfortunately, getting a smaller interest rate than your current mortgage loan is not very common if you have bad credit.

Refinancing is an expensive process and, even if you are able to get a loan with a lower interest rate, it might not be worth it, due to the higher overall cost of the new mortgage. Everyone’s financial situation is different, and you might very well be able to refinance with bad credit, get a lower interest rate and end up saving money. The only way in which you can find out if refinancing with bad credit is a good choice is by talking to several lenders about your situation, carefully look at what they’re offering, and decide if refinancing is to your advantage. Here is a list of the top refinance lenders for bad credit:

Top Refinance Lenders for Bad Credit Borrowers

  1. Wells Fargo. One of the largest financial services providers in the U.S., Wells Fargo, started its business in 1852. Since then, it has expanded in more than 35 countries, and currently has more than 270,000 team members. Wells Fargo specializes in mortgage, business banking, consumer and commercial finance, as well as wholesale banking.
  2.  JP Morgan Chase. The acquisitions and mergers of more than 1200 banking institution helped JP Morgan Chase become one of the largest banking institutions in the country and in the world. Some of the most important mergers were with J.P. Morgan, Chase Manhattan, First Chicago and Chemical. Chase serves millions of clients in the U.S., and offers services such as consumer banking, loans, private banking, asset management and mortgages.
  3. Flagstar Bank. Headquartered in Troy, MI, and founded in 1987, Flagstar Bank is one of the country’s top mortgage originators. They deliver award-winning services such as residential lending, retail banking and government banking.
  4. Fifth Third Bank. As of this year, Fifth Third Bank has assets of $318 billion, and is one of the largest banking institutions in the Midwest. Fifth Third Bank offers its customers four main services: consumer lending, branch banking, commercial banking and investment advising.
  5. SunTrust Bank. The Atlanta-based bank has more than 1,500 branches throughout the states of Georgia, Florida, South Carolina, North Carolina, Tennessee, Maryland, West Virginia, Virginia and the DC.  SunTrust Inc. and its subsidiaries offer a wide range of services to its retail and business clients, including banking, mortgage, asset management and securities brokerage.
  6. Nationwide Direct Mortgage. Nationwide Direct Mortgage was founded in 2009 and is one of the best-know online direct lenders in the country. This means that customers can borrow funds directly from Nationwide Direct Mortgage, without dealing with a broker or a third party agent. Nationwide Direct Mortgage provides customers an online mortgage application process, which can be tracked by applicants, who will obtain an approval or decision in less than a week.
  7. CapWest Mortgage. Founded in 1971, CapWest Mortgage is a division of Farmers Bank and Trust, a family owned bank since 1907. CapWest is approved by Freddie Mac and Fannie Mae, and is a Costco Preferred Lender. CapWest can originate loans in all 50 states, and also offers saving accounts, Certificates of Deposit and home equity lines of credit.
  8. Cole Taylor Bank. Named the sixth largest bank in Chicago by Crain’s Chicago Business, Cole Taylor Bank has assets of $5.8 billion, and can originate mortgages in 33 states. The bank was founded more than 80 years ago, and can offer a wide range of financial services, including residential mortgage lending and personal banking.
  9. First Financial Services, Inc. FFSI specializes in residential home financing and commercial lending. The company, known for their excellent rates, was founded in 1991 in North Carolina, and is also licensed in South Carolina, DC, Maryland, Virginia, Texas, Florida and Georgia.
  10. Amerisave Mortgage. Amerisave is one of the nation’s largest mortgage lenders, and offers clients all mortgage products, such as refinance loans, FHA, VA mortgages or reverse mortgages. Amerisave operates in all US states, and has more than 1,500 employees. The company guarantees an on-time closing, and they have excellent prices and offer great service.

Refinancing could be a great option for you and may save money for you in the long run, but it’s important to weigh in on the pros and cons before you make a decision to proceed. There is a high chance, especially for those borrowers with bad credit, for refinancing to cost more upfront then it will save you eventually, making it pointless for you to refinance. However, with this list of the top 10 lenders, you have the best chance of getting a better interest rate and saving money.

Life After Foreclosure: Your Future in Home Ownership Revealed

Life After Foreclosure- Your Future in Home Ownership Revealed- 150x150Losing a home to foreclosure is a very stressful and discouraging experience which may have a negative influence on one’s desire to own another home. Fortunately, a foreclosure is not the end of the world, and it doesn’t mean that you can never own a home. Depending on the circumstances of your foreclosure, it’s just a matter of time before you will be able to apply for a new mortgage.

When Can You Apply for a New Mortgage?

Normally, you have to wait seven years after the foreclosure to buy another home. This is the period of time that is required by the government-endorsed organization Fannie Mae, a company that has purchased a large number of mortgages in the United States. The foreclosure remains on your credit report for seven years, but even after that you will need a good credit score in order to secure another mortgage loan.

If your foreclosure was caused by extenuating circumstances, like losing your job, a significant pay decrease, or illness, the period of time before you can reapply for a mortgage loan is reduced to three years. Extenuating circumstances are events that are beyond your control and must be properly documented.

Another possibility is that some lenders will be willing to give you a new mortgage loan right away. Unfortunately, the new mortgage loan will probably require you to pay a very large down payment and high interest rates.

How Can You Improve Your Credit Score?

Defaulting on your mortgage will have serious repercussions on your credit score. The foreclosure will show up on your credit report for seven years, but you should start rebuilding your credit score right away. If the foreclosure is the only negative event on your credit report, then you can rehabilitate your credit score in as little as two years.

In order to start increasing your credit score you will need a credit card that you will use to pay for your purchases. On-time payments will reflect on your credit report when the time to apply for a new mortgage loan comes. It is important to make sure that all three credit agencies record your payments on a monthly basis.

The housing market crash has left many Americans with no other options than finding a place to rent. Fortunately, recovering from a foreclosure is not as hard as it seems, it just takes a while. Rebuilding your credit and regaining the lenders’ trust can help you get a new mortgage loan in only a few years. Foreclosure is a scary and depressing process, but, through a little research and a lot of determination, you can quickly get back on track and become a home owner again.

 

The Foreclosure Process

foreclosure2-150x150Have you experienced financial difficulties to the point of not being able to make payments on your mortgage? These things happen, and while they are less than ideal, there are always solutions. Often times you will be given a grace period to try and sort through your payments. If this doesn’t work, a short-sale will probably be your next option.  Foreclosure will most likely be one of your last options- read on to learn what a foreclosure is and how it works.

What is a Foreclosure?

A foreclosure is the process by which a homeowner’s property rights are forfeited as a result of failing to pay the balance on a mortgage loan. A foreclosure is generally a last resort whose need arises when you are unable to short sell your house or pay the outstanding debt through any other means. Normally, it will be sold through a foreclosure auction. In case a sale isn’t made through the auction, the ownership of the home reverts to the lender.

When taking out a mortgage, the borrower signs a deed of trust that puts a lien on the acquired property. This makes the loan secured, so ownership can legally revert to the lender in case the borrower fails to make payments on the property on time. If a lender does not ask for any collateral, then this becomes an unsecured loan. The lender of an unsecured loan can take you to court in case of default but he cannot forcefully collect any money from you.

Most lenders prefer a secured loan because if you default on the payments, the lender can seize your property and recover the balance owed.

The Foreclosure Process

There are five major steps in the foreclosure process, including:

1.    Notice of missed payments

It is always expected that you make payments on time. However, the lender, in most cases, will allow a 10-day grace period. If you don’t make the payment after these 10 days then the lender will issue you with a notice of a missed payment. This notice asks you to send the payment ASAP to avoid legal action. If you happen to send the payment to the lender after issuance of this notice, then you may only suffer a penalty and negative feedback on your credit report.

2.    Notice of default

If you fail to make a payment for a period of more than 30 days, the lender will issue you with a notice of default. This is a silent way of telling you to pay up or a different action will follow. The notice of default includes information about the property, your name, the amount that you owe the lender, the number of days that have passed since the payment was due and a detailed statement outlining the terms and conditions of the mortgage that you signed with reference to payment timelines. Depending on the terms of the lender, the notice of default may explain that further measures will be taken if an action is not taken by the borrower. While some notices of default are friendly, others can be quite harsh. The most common action after a notice of default is a foreclosure.

3.    Foreclosure notice

A foreclosure notice follows if you don’t respond to the notice of default in a manner that convinces the lender you will pay. The foreclosure notice tells you that the bank is on the verge of initiating foreclosure proceedings. Depending on your location, you have 30-120 days to work a deal with the lender through a short sale. If the borrower pays off the balance on the mortgage then the foreclosure is dismissed. However, foreclosure commences if you fail to make the payments. The notice includes the amount due, the interest rate, the name of the lender and the contact information of the lender’s attorney.

4.    Auction

When the default has not been remedied at the end of the set timeline, the lender will proceed to sell your property through a foreclosure auction or a trustee sale. The auction can take place at the county courthouse, at a convention center, at the office of the trustee or at the scene of the property itself. The property is sold to the highest bidder at the fall of the hammer. Since many people don’t manage to pay cash on the spot, the bank and the highest bidder may enter a deed of lieu for foreclosure. In other cases, the lender may buy the property back.

5.    Post-foreclosure

If the auction is not successful then the ownership of the property reverts back to the lender. This is referred to as real estate owned or bank-owned property. Such properties can be sold either through a local real estate agent or in the open market. Other lenders may prefer to sell their property at liquidation auctions, convention centers, or in auction houses.

A foreclosure is a last-resort option only when all other of the other options have failed. It has the disadvantage of hurting your credit score for a period of at least 7 years and will make it difficult to deal with future mortgage loans. Be sure to exercise all of your options before resorting to a foreclosure. If you do end up with a foreclosure, stay positive as there is always light at the end of a tunnel. Your credit will eventually bounce back and you will be able to learn from the past and move ahead. Here are some other resources that may help you in periods during and after financial issues: Top 6 Mortgage Lenders for Borrowers with Bad Credit, Improve Your FICO Credit Score, and Top 10 Steps for Getting a Post-Bankruptcy Loan.

 

 

How a Short Sale Works

ShortSale-150x150If you owe more on your mortgage than the current value of your house, then you may want to look into a short sale as an option. When you are having financial problems and you want to try avoiding a foreclosure, the alternative is a short sale. Unfortunately for either option, the consequences are grave: destruction of your credit score, loss of personal dignity, and possibly embarrassment for your family members. Sometimes this is your only option so you just have to proceed and push through the discomfort of the situation.

All About Short Sales

Many realtors are reporting that they are having more short sales compared to any other sales in the last 5 years. This sad fact highlights the depressed economy and the many Americans struggling with debt. Even non-delinquent sellers are qualifying for short sales these days.

When a lender agrees to a real estate short sale, the lender is basically accepting an amount less than the total due. But not all lenders accept discounted payoffs or short sales, especially when a foreclosure will mean more financial recovery for them. It is also important to note that not all properties or sellers qualify for a short sale arrangement.

Honestly speaking, there are some drawbacks to short sales with the parties involved. All borrowers are advised to:

  • Know the type of loan involved. This influences flexibility in negotiating for an offer.
  • Seek legal advice. Find a competent and registered real estate lawyer in your state.
  • Find out about taxes. Ask an accountant about taxes associated with short sale transactions.
  • Meet deadlines. Be aware of all of the deadlines and stay on top of them. Not following the timeline could potentially ruin a short sale, so it is important to stick to dates throughout the process.

According to the Mortgage Forgiveness Act of 2007, the IRS will not consider debt forgiveness as income per se. There is no guarantee as to whether a lender that accepts a short sale will legally pursue the borrower for the difference unpaid. This amount is referred to as a deficiency in some states. Given the prevailing laws, a lawyer may be required to determine whether you actually qualify for a claim or deficiency judgment.

Steps to a Short Sale

1.    Contact the lender.
Before finding a short sale specialist, you will have to make several calls in order to find the right person. You will hopefully be able to establish rapport with the lender and make sure that the lender has you in their best interest.
2.    Submit a letter of authorization.
Lender etiquette says not to disclose any personal information about their clients unless there is express permission to do so in writing. It would be much better if you directly speak to the lender and endorse the lawyer or agent representing you. This letter contains your name, the loan reference number, the property address, the date, the name of your agent and their contact details.
3.    Prepare the net sheet.
A net sheet is an estimated closing statement which indicates the selling price that is expected along with the costs of sale, outstanding payments, unpaid balances, and any real estate commissions. You don’t have to stress remembering every detail in preparing this because your lawyer or agent should be able to do this on your behalf. If the net figure indicates some cash then you may discover that you don’t really need a short sale.
4.    Obtain a hardship letter.
This letter is meant to hit the nail on the head. It clearly describes what happened that led you to your financial disability. In this letter, you are pleading with the lender to accept less than the amount due. You need to explain that you were ill, lost your job or had your family involved in an accident. However, you must be honest because criminal behavior and dishonesty may only lead to prosecution.
5.    Provide proof of assets and income
Honesty about your income and assets is paramount in one’s attempt at a successful short sale. You should clearly relay information pertaining to your negotiable instruments, real estate property, money market accounts, savings accounts, and stocks to the lender. This is considered assurance that you will not be able to repay.
6.    Provide bank statements.
The lender wants to be convinced of your financial misfortunes by all means. That’s why you need to explain any unaccountable deposits, unusual number of checks or huge cash withdrawals on your bank statement. This will enable the lender to determine whether any deposits will actually continue.
7.    Conduct a comparative market analysis.
A comparative market analysis enables you to substantiate that the value of your property has dropped because of a market decline. It should indicate the prices of similar homes that have been sold in the past 6 months, the ones being sold currently and any pending sales. Your agent can prepare this document on your behalf.
8.    Strike a purchase agreement.
If you come to an agreement for selling, then you should provide the lender with a copy of that offer. If you had listed it, then the listing agreement should be there too. However, the lender may refuse to make certain payments such as home protection claims and the cost of inspection on the property.

If all goes well, the lender will most likely approve your bid. You may also request that the lender not report adverse details about you to credit agencies given your present financial difficulty.

 

 

Top 10 Components for Maintaining a Good Credit Score

images (9)A good credit score is invaluable, especially with the state of our economy. If your credit score is less than acceptable, then landing a loan deal might be as hard as finding a needle in a haystack. Denying those with poor credit scores has been a trend with many lenders; they do so in order to minimize losses as a result of higher default rates being associated with lower credit scores. Typically, a low credit score is synonymous with poor financial management and an inability to make monthly payments in a timely manner. So it is very important to do what you can to have a good credit score as you will have access to a variety of much better loans and rates.

Importance of Good Credit Scores

  • Low interest rates. Lenders always compete for borrowers with a good credit score. Many lenders will attempt to entice you their offers of low interest rates– the golden rule is “the higher the credit score, the lower the interest rate”. This is a sign that the down payment for a loan will be lower and you will also be able to complete repaying a loan within a relatively shorter period of time.
  • Employment opportunities. Owing to the litigation costs associated with defaults, employers are constantly screening the credit scores of candidates before hiring. Employers are also interested in hiring employees who demonstrate a high degree of financial responsibility because this means they will not misuse the company’s resources.
  • High purchasing power. This is perhaps the biggest advantage of having a good credit score. You easily gain access to a variety of loan products with a large credit limit on each of them. Ideally, you can spend a relatively small amount of money on a car, expand your small business, buy a better home or send your child to college.

Components of Maintaining a Good Credit Score

Good credit scores, unlike the weather, are not controlled by Mother Nature or fate. Thus you must employ a formula to help you garner the highest possible credit score. The components below, among others, will help you to maintain a good credit score.

  1. Don’t hit the credit limit. Hitting the roof of your credit limit can badly damage your credit score. One way of maintaining a good credit limit is to set a credit limit target, say 50%, beyond which you will not spend.
  2. Control all your debts. Your credit always reflects all of the debts you have, from mortgages to consumer loans. They may strain your overall budget or create an imbalance in your income and expenditure equation, leading to more trouble. Controlling all of your debts will positively be reflected on your credit score.
  3. Make payments on time. Perhaps the best technique for maintaining a high credit score is the regular and timely payment of your credit card debt. A single missed or late payment can have an effect on your credit score negatively in addition to penalties.
  4. Don’t close old credit cards. Your credit history contributes to about 30% of your credit score. Closing old credit cards means deleting your credit history—which lowers your credit score. Even if you don’t use them regularly; keeping them open enables you to have a stronger history.
  5. Maintain few credit cards. Every time you apply for a new credit card, your credit score is negatively impacted. You should therefore maintain as few credit cards as possible. A single inquiry may even take some points from your credit score, depending on the nature and amount in question.
  6. Check your credit report regularly. All three credit bureaus entitle customers to a free copy of their credit report from annualcreditreport.com annually. Since human systems make errors, check for credit limits that have been underreported, loan amounts that have been over reported and delinquencies that have been misrepresented. Requesting correction from the credit bureau will help you maintain a good credit score.
  7. Use your credit card. You credit history contributes to about 30% of your credit score. Failure to use your credit will therefore mean a poor credit history. A golden tip is to borrow and then repay regularly. For instance, you can borrow and repay after a week or a month.
  8. Avoid credit fatalities. Public record issues such as bankruptcies can have an impact on your credit for about 7 to 10 years. Making too many credit inquiries can also kill your credit score. Since only time can repair this, the best way to maintain a good credit score is to avoid bankruptcy at all costs.
  9. Select and use your favorite credit card frequently. FICO has established a model that penalizes you heavily when you have multiple balances. However, you can limit this by concentrating a bulk of your spending efforts to a single credit card. In the meantime, you can use the other credit cards on an infrequent basis, like once every three months. Failure to use your other credit cards reduces your credit score while closing them down kills your utilization ratio.
  10. Check the behavior of your actions with the FICO simulator tool. FICO provides a free simulator tool which shows you how your score behaves when you undertake particular actions. This tool will intelligently inform you when you need to repay more debt, change your loan type, or take out a new loan.

Following these tips will surely help you to maintain a good credit score. And with high credit scores, you will be on the road to low insurance rates and low or no security deposits. Be a guru in sound financial management today by striving to maintain a high credit score!

Top 10 Steps for Getting a Post-Bankruptcy Loan

bankruptcy- 150x150With the current weakening dollar and bad financial climate, many are losing their jobs and business owners are closing at the same time. And if you’ve lost everything and filed for bankruptcy, then you have to wait at least two years to get a loan. However, you get to qualify for 100% of the financing advanced once this waiting period is over and you’ve met the conditions set by the credit bureau.

Coming back from bankruptcy can be tough. Dealing with your low credit score when in financial talks with lenders and even car dealers can be difficult. The important thing is to get back on track and start moving forward. You have new credit history to build!

The Effects of Bankruptcy on a Victim

A bankruptcy is often a desperate measure taken to avert a desperate situation. Some of the negative effects of a bankruptcy include:

  • Low credit score. Bankruptcy is the leading action that kills one’s credit score for about 7 to 10 years down the line. However, this effect diminishes as this period nears the close.
  • Difficulty in qualifying for loans. Lenders are very sensitive to credit reports in an attempt to avert the risk of defaults. As such, it becomes very difficult for a bankrupt individual to qualify for a loan a few months after declaration of the bankruptcy. You can only qualify for low-amount and high-interest loans if you are lucky.
  • Difficulty in securing a job. Since many employers require you to furnish them with a credit report before being hired, bankruptcy makes it very difficult for one to land a job. Employers consider someone with a good credit rating as one who will not put the company in financial trouble.

On the other hand, bankruptcy offers some advantages:

  • A new financial regime. If you are successful in filing for a bankruptcy then you have the opportunity to start all over again as if nothing has happened before. This is a golden opportunity to rebuild financially; having learned from the past mistakes.
  • Higher credit rating. Your credit score can go below 400 immediately after a successful bankruptcy. However, as you now take a new turn of events with the previous mistakes in mind, you will likely have a higher credit rating than you had before the bankruptcy.
  • Cessation of creditor pleas. Once you file for bankruptcy, you start breathing again because the court stops all your creditors from calling you all the time, sending emails, threatening you, foreclosures and so on and so forth.

Getting A Post-Bankruptcy Loan

  1. Be patient for at least 2 years. Most mortgagors will not look at your application until at least 2 years after the bankruptcy. A few others have capped this waiting time at 3 years. This waiting period is a learning period during which you can make several decisions. For instance, you can circumvent this waiting period in case you are willing and able to remit the down payment straightaway or settle for a loan at a higher interest rate.
  2. Review your credit report. After a bankruptcy, you are desperate for a higher score which can help you to secure a mortgage or any other loan. Make an effort to improve your credit score by obtaining a free report from Equifax, Experian and TransUnion free of charge by visiting annualcreditreport.com and checking for any errors in the credit report. File complaints with the relevant credit agency to have your credit score corrected.
  3. Understand and adhere to bankruptcy conditions. As you plan to apply for a mortgage loan, understand the consequences of the bankruptcy. If you had filed for a Chapter 7 bankruptcy that wipes out all unsecured debts, then it affects your credit history for the next 10 years. On the other hand, a Chapter 13 bankruptcy that prevents a foreclosure will affect your credit history for the next 7 years. However, your credit score will continue to rise as you apply for more credit and make payments on time.
  4. Consider available alternatives. Usually, there are two options to select from. The first one is the traditional lender while the other is an online lender. A traditional lender requires your physical documents in order to make various comparisons—a time consuming process. If you need the loan approved rather quickly then an online lender would be a better option.
  5. Clean up the damage on your credit report meanwhile. What impresses a lender most is the effort that you are making to improve your current credit score. Making prompt payments of your bills and establishing a visible track record of income will help to improve your current credit score. This will not only increase the chances of qualifying for a loan but also qualifying for more money at lower interest rates.
  6. Pay all your current bills in good time. Since your credit score is badly damaged, you must clear all your bills and make any due payments in good time in an attempt to improve your payment history. If you have a credit card, use only a small percentage of the credit limit which you are sure you will manage to pay back when due. Borrowing and paying on time improves your credit score rather than having no activity on your credit cards at all.
  7. Amount of loan and interest rates may not be favorable. Bankruptcy jeopardizes the way lenders view your ability to repay. As you hunt for a mortgage loan, beware that you will qualify for relatively lower amounts at higher than average interest rates because you are considered high credit risk. However, the terms get better as the lender monitors how well you pay your bills post-bankruptcy.
  8. Hire the services of a mortgage broker. After bankruptcy, managing your personal financial services is usually very difficult. You can count on a mortgage broker during this time to help you through the process of searching for a new mortgagor. They will do all the paperwork for you and present the most suitable loan that meets all your requirements.
  9. Secure all the money for your down payment. The more you give as down payment, the lighter the burden you have in principal repayment and interest rate charged. It also shows the lender that you can manage your finances properly once again and secure income, so you will qualify for more credit. In most cases, you may not be able to raise the down payment money through your own efforts. That’s where assistance programs like grants, 401k, Neighborhood or Nehemiah comes in.
  10. Consider these three critical factors. First, the waiting period for a successful mortgage application after bankruptcy is 2 years. Note that this period is variable from one lender to another and the longer you wait, the higher your chances of qualifying for a loan with more favorable terms. Secondly, an application following bankruptcy must be detailed with your current pay slips, bankruptcy discharge papers, 2-year tax returns, and a summary of all your liquid assets, bank details and written explanations. Finally, if you don’t want your finances to be disclosed then you may opt to use the low-doc or no-doc mortgage approach.

The truth is that qualifying for a loan after bankruptcy is a pain in the neck. However, your efforts in improving your credit rating, persistence in rebuilding and patience as you pursue various options will pay off and get you back on track.

Top 6 Mortgage Lenders For Borrowers with Bad Credit

bad credit lenders-150x150Poor credit scores have typically led to credit companies slamming the door. Of course this is attributed to the fact that your payment capacity is in doubt. However, the good news is that you can take a mortgage loan or mortgage refinance from a mortgage company even with your bad credit.

Potential borrowers may worry about the inability to prove a regular flow of income and a poor payment history. Bury your anxiety today and approach a mortgage company for bad credit straightway.

Benefits Of Bad Credit Mortgages

It is not easy to imagine that bad credit mortgages offer some benefits but you’ll be surprised the privileges you could enjoy. These include:

  • Flexible monthly payments. Bad credit lenders are very compassionate. They allow you to take a mortgage loan at the terms and conditions of repayment which you select yourself.
  • Lower interest rates. This may sound ridiculous but it is absolutely true. Given the current economic crunch, there are very few borrowers who meet the rough requirements of good credit mortgagors. And as such, bad credit mortgagors offer their loans at competitive low and affordable interest rates.
  • Cash for alternative uses. Bad credit mortgages can help you consolidate all your debts so that you have extra cash for other uses. The extra cash can be used to clear all other debts you have as you remit lower monthly payments which you can manage. This will definitely improve your credit score.
  • Rewards. There are several banks and mortgagors who may reward you as a result of your improved cash management. This arises, for instance, when you make several payments on time. Your lender may decide to decrease the interest rate as a reward.

Lenders Offering Loans for Bad Credit Borrowers

1. First Magnus Financial Corp. It was founded in 1996 in Tucson, Arizona. Other than offering you bad credit mortgages at very competitive rates, the company also allows you to use any extra cash from your mortgage deal. You can use this extra cash to buy a car, make improvements, go on holiday, and consolidate your debts among others.

2. Premier Mortgage Funding Inc. Headquartered in Maryland, it provides several mortgage products and services to its lenders. It doesn’t matter whether you don’t have a proven income record or you have a poor payment history. Premier Mortgage Funding Inc. provides you with a mortgage loan under very flexible monthly payments. These will improve your credit rating and enable you to qualify for more credit.

3. First Horizon Home Loan Corporation. Formerly known as FT Mortgage Companies, it changed its name in March 2000. The company is a leader in providing commercial lending products for individuals and institutions since its foundation in 1995. This company designs a well-secured mortgage loan to suit your current financial situation. It enables you to become a homeowner under very friendly credit terms which enable you to pay periodically as you build equity on your home.

4. GMAC Mortgage LLC. The application process for your first time mortgage, second mortgage or refinance mortgage is simple and fast. Founded in 1985 with its headquarters in Fort Washington, it offers VA and FHA loans. Once you submit all the required documents, you complete the application within less than 10 minutes and receive the loan application within a few days. These mortgage loans are offered at very affordable rates with low interest rates.

5. Primary Residential Mortgage Inc. They began operations in 1998 with a handful of employees but the current staff has increased to 1,500. They have more than 200 branches in 49 States. The company offers a variety of loan options with a quick turnaround time for both locked-rate mortgages and preapproved mortgages. It offers mortgages at compellingly competitive rates to borrowers with a bad credit rating. Currently, it has more than 1 million loans outstanding.

6. Bank of America. It is the 5th largest bank with more than 57 million customers. With loan origination figures exceeding $100 million, it provides several forms of mortgage loans varying across the board. You can apply for your bad credit mortgage loan online today and have it approved online.

It is not uncommon to find people with a bad credit report totally stressed and knocking at a counselor’s office day in day out. However, you can get out of this painful financial quagmire by checking the mortgage terms of each of the above lending institutions. Whether you are short on cash for college education or you want to refinance but your credit score is badly damaged, you can apply for a mortgage today!

Need Help Keeping Up With Mortgage Payments?

helpful_refinance_tipsMany people desperately seek mortgage help so that they can catch up on late mortgage payments and pay off their mortgages every month. You can find yourself in a lot of trouble if you’re behind on your first, second, or third mortgage. Here, we’ll give you some clear refinancing tips and other mortgage advice that can help you secure your mortgage payments.

Only Refinance If Absolutely Necessary
First of all, it’s very clear that you should not refinance unless you absolutely have to. While refinancing can extend your mortgage term and even lower monthly payments, you may end up paying more money in the long run. Many refinancing companies exist just to convince people to refinance when it’s inappropriate.

When choosing a lender, be sure to select a company that is licensed in your state. Some very shady lenders out there use deceptive tactics to milk you for everything you are worth. Remember that it’s wise to get involved in a shorter term mortgage and make a big down payment. A large down payment can severely lower those monthly premiums. Also, you can take advantage of several different discounts offered by lenders.

Get Breaks with a Good Infrastructure
Homeowners who possess good homeowners insurance and have installed a strong security system and smoke alarms can benefit from breaks on their monthly premiums. It’s also important to negotiate with lenders before getting into any mortgage. Remember, regardless of what your contract says, it’s always possible to work in new language and make the mortgage benefit you more.

Government Programs Available
There are government programs available for homeowners who want to take advantage of low interest rates. The new $75 billion Homeowner Affordability and Stability Plan stimulates lending and borrowing by providing incentives for lenders to restructure home loans. You’ll generally need at least 20% equity in your home to refinance, as requirements for refinancing have gone up. FHA loans can help homeowners with debt acquire lower interest rate on their mortgages. If a homeowner’s property value has gone down, it may be very difficult to be eligible for refinancing or even federal loans. Loans above $417,000, also considered “jumbo mortgages“, are generally not eligible for refinancing. Conforming mortgages, however, generally are available for lower interest.

Stay Tough Even If You Have Bad Credit
At-risk homeowners may qualify for some loan modifications. Modifications can actually restructure home loan terms. Some borrowers may need to enroll in a HUD-certified program to qualify for these loans. Qualified lenders and borrowers can receive up to a 31% reduction in their monthly mortgage payments. These loans can generally be set for a period of five years, after which they return to conforming rates.

Principal Reductions Are Also Available
The majority of these reductions are interest-rate reductions, though it’s possible to obtain principal reductions as well. If you make payments on time, you can receive incentive bonuses Interest-rate-cutof up to $1,000 a year. Investors, speculators, and “home-flippers” are not eligible for the program, as all applicants must actually occupy the home in question. Also, you can only obtain loan modifications if it will result in a net savings compared with the expenses incurred during a foreclosure. Capitalize on these new government programs so that you can lower your mortgage rates.