How Previous Credit History Impacts a Mortgage Loan Decision

Loan decisions are based on several factors, but few are quite as important as your previous credit history. This is true with mortgage loans. While in the past, you might have been able to get a mortgage loan with credit that would make you ineligible for other types of loans, the collapse of the housing bubble and the declining economy in general made mortgage lenders reluctant to give loans unless they are reasonably sure you will be able to pay it. Now more than ever, the better your credit is, the more likely you are to get a loan that has good terms and fits all of your needs.

Understanding Your Credit History

Your credit history is a record of your ability to pay your debt obligations on time. Credit score is the numerical value of your credit history. It ranges between 200 and 850. The higher the credit score, the better your credit history is. The credit scores are compiled by credit reporting agencies. Once the credit scores are compiled, these agencies will sell them to the lenders. Since the scores vary slightly between agencies, lenders will often try to get all three. Your credit score is compiled using several different factors. They include:

• Payment history – this is based on the number of times you missed your monthly payments on your credit cards and other loans, as well as how often you failed to pay your loan altogether and how long it took you to repay your existing debt.

• Credit utilization – this is the ratio of the amount of credit you use over your current credit limit. In order to maintain good credit score, you must spend no less than 10 percent and no more than 30 percent of your credit card limit. It is worth noting that closing your credit card accounts will make the score worse, since your spending from those accounts drops down to zero.

• Length of credit history – the longer you use credit while paying your bills on time, the better credit score you will be.

• Types of Credit Used – the more types of credit you use, the bigger your credit score will be. In other words, you should have several different types of loans and several different credit cards.

• Number of credit inquiries – this is based on the number of times you try to get new credit. Generally speaking, the more often you try to get credit within a short period of time, the lower the credit score will be. This does not apply to mortgage and auto loans – you can apply for them as often as you want.

Student Loans for Law School

If you are considering becoming a lawyer, but will need student loans for law school, there are 3 options to consider. Each of the options described below has certain advantages and restrictions that you should understand and consider when you are trying to figure out how to pay for school. For most students, a blend of two or three of these options is most appropriate, o required, because of the restrictions that exist. Understanding your options is the first step to planning for law school.

Subsidized Graduate Stafford Loans

A subsidized graduate Stafford loan is awarded based on your financial need. With this type of loan, you do not have to pay any interest while you are in school or during the deferment period. The deferment period typical extends for six months after graduation. During this period, the federal government subsidizes the loan by paying the interest for you. Once you enter the repayment period, interest begins to accrue to you as the borrower, but before this, the loan is interest free. All Stafford loans have principal guarantees provided by the federal government and carry maximum interest rates that vary based on the date the funds are dispersed.

There are restrictions on the maximum amount that a law student can borrow as a subsidized Stafford loan. You can borrow no more than $8500 per year, and no more than $65,500 total. The maximum debt amount for law students includes any subsidized Stafford loans that you took as an undergraduate as well.

Unsubsidized Graduate Stafford Loans

Unsubsidized graduate Stafford loans are not based on need. Any eligible student currently enrolled in school may apply for this type of loan. In this case, you take the loan and the interest begins to accrue immediately. It is still deferred until you graduate, but the additional amount is capitalized. This means that the interest balance that goes unpaid while you are in school is added to the principal balance upon graduation.

There are restrictions on the maximum amount that a law student can borrow on an unsubsidized loan as well. You can borrow up to $20,500 in any given year, including the $8500 than may be subsidized. The maximum debt amount for a law student is $138,500, which includes the $65,500 maximum of subsidized Stafford loans and any Stafford loans that were taken out while you were an undergraduate.

Private Loans

In addition to Stafford loans, as a law student, you may be eligible for private loans. This is usually the type of loan that students take to cover cost of living, as well as any shortfalls created by other loans. You should contact your school and determine the annual cost that they estimate for attending. This number will include tuition, books, and cost of living. This number is published as is usually the maximum a lender will approve you for without special dispensation from the school financial aid office. This is a universal number determined for all students and is meant to help you budget to a standardized and reasonable figure. Most students use a blend of all three types to meet all of their financial needs.

A Guide to Student Loans for Health Professions

Student loans for health professionals are a boon to financially needy students to pursue their degrees. Many students ambitious to become health professionals are daunted by rising college costs and wonder whether they can fulfill their dreams. Luckily for them, there are various federal and private loans available to help them complete their studies. These loans, which have varying eligibility requirements, terms and conditions, offer low interest rates and flexible repayment terms. The loan programs are provided by the Health Resources and Services Administration (HRSA), part of the Department of Health and Human Services (HHS).

The Health Professions Student Loan (HPSL)

This is a federal loan program offering loans with very low interest rates, and it is administered by the college or university where the student is pursuing a degree. The interest is subsidized during the school term, and the grace period and the repayment time is about 120 months.

The Primary Care Loan (PCL)

This provides long-term aid at more advantageous terms than all the other loans. Under this plan, the student has to enter a residency training program in one of the primary health care fields upon completion of his or her studies.

The Nursing Student Loan (NSL)

Financially needy students studying towards a graduate degree, a baccalaureate or an associate degree or a diploma in nursing are eligible for the NSL.

The Loan for Disadvantaged Students (LDS)

Through this program, students with disadvantaged backgrounds as per the HHS and who are eligible for the HPSL, PCL or NSL programs can get loans.

There are rules and regulations for all the above loan plans that must be strictly followed. The applicants themselves must meet certain requirements, such as being enrolled in certain medical disciplines, and their college or university must be among those deemed eligible. Dependent students are required to report parental data on the FAFSA (Free Application for Federal Student Aid). Documents like promissory notes and disclosure forms are duly to be filled out, and an exit interview is mandatory.

The U.S. Department of Education's Direct Loan Program can be explored via the Internet by students and parents for information about the Direct Loan Program.

The FFEL Program is a loan program that includes the following four loans: Stafford Loans, Unsubsidized Stafford Loans, Federal PLUS Loans and Federal Consolidation Loans. These are available with federal as well as private loan options like Federal Stafford Loans, Federal Graduate PLUS Loans, CitiAssist® Health Professions Loans, CitiAssist® Residency, Relocation and Review Loans. Medical School Loans, Medical Student Aid and Gradloans.com are a few premier loan providers also with federal as well as private loan schemes, consolidation, residency loans and board exam loans. Loans like Stafford loans are the most commonly chosen schemes to pay for medical school at very low costs. Another such loan is the federal Perkins loan program, which offers a low interest rate to help needy students in their post-secondary studies.

It is best to explore all opportunities for federal student loans by completing and submitting the FAFSA to avail any eligible federal loan first before venturing out to seek private loans, as they have higher interest rates, often requiring payments when in school and tighter repayment options as well more fees.

Reduce Your Car Loan Monthly Payments by Refinancing

Your monthly car payment is usually one of the biggest financial obligations that you have every month. Besides your mortgage payment, most of the time, the car payment is the second largest payment each month. One way that you could potentially address this is by refinancing. Here are the basics of refinancing an auto loan to lower the payment.

How it Could Help

Refinancing an auto loan could potentially lower your payment in a few different ways. When you initially take out an auto loan, the term is usually for around 5 years. Each and every month, part of your payment goes towards the principal and the interest on the loan. When this happens month after month, the balance that you owe on the loan will go down.

Although your balance is going down, the loan is still amortized on the original loan amount. Therefore, your monthly payment is set up based on the old loan balance. If you were to wait a few years and then refinance the loan, you could amortize the loan on the new loan balance. For example, instead of paying your monthly payment based on a $15,000 loan amount, you can pay your payment based on a $7,500 loan amount. This would increase the time that it takes to pay off your loan, but it would result in a lower monthly payment.

Another thing that could potentially help is if you can locate a lower interest rate for the loan. For example, depending on what rate you were able to secure for your initial loan, you may be able to get a lower rate in the market later. Therefore, instead of paying 5% on a car loan, you could find a loan for 4%. Even if you have not paid down your balance much, this will have the effect of lowering your monthly payment.

How to Refinance

In order to refinance your car loan, you will first have to locate a lender that you can work with. You need to shop around through multiple outlets in order to find the best rate. You need to check with banks, credit unions, and online auto lenders. There are a plethora of options available and checking them all out will ensure that you get the best rate available in the market.

Once you locate a lender that you can work with, you need to apply for the new loan. Filling out the application will be pretty simple. You will provide them with the basic information that they require, such as your name, address, and social security number.

The lender will then pull your credit report and decide whether you are worthy of a new loan. If you are approved, they will give you the money that you need to pay off the old loan. You will pay it off and then start making payments to the new lender.

Why Are Suprime Car Loan Interest Rates So High?

Getting a subprime car loan could be an option for you if you have been turned down by a traditional car lender. Subprime car loans provide loans to those that have less-than-perfect credit at a higher interest rate. Here are the basics of why subprime car loans have a higher interest rate than other loans.

Subprime Car Loans

In order to fully understand why subprime car loans have such high interest rates, you first need to understand what these types of loans are. A subprime loan means that the lender is dealing in the riskiest part of the market and makes the loans separate from traditional loans. Those with a 640 FICO score or lower will be potential clients for this market.

Increased Risk

The lenders are going to charge more for the interest rate on these types of loans because of the increased risk. When you are dealing with people that have a credit score of less than 660, this means that you are taking on a great risk. Those with low credit scores got those scores because of their disregard to paying their debts. Regardless of what happened to cause them to not pay their bills on time, the fact remains that they are a bigger credit risk than those with higher credit scores.

Lending money to someone for a car loan is an investment for the lender. They do it so that they can make a return on their investment. One of the first rules of investment is that when you take on higher risk, you should be able to get a higher reward. Therefore, when the lender works with someone that falls into a high risk category, they are going to be asking for a higher return on their investment.

Lack of Options

Another reason that these lenders charge so much is because they know that they can and still have plenty of business. There are quite a few people that fall into the category of not having a good credit history. These people can not get a normal car loan and therefore, they have to deal in the subprime market. When the lenders know this, they can charge a higher rate of interest and still have a steady stream of applicants that have been turned down elsewhere. Almost everyone needs a car these days and therefore, they will be willing to take any interest rate that they can get in many cases.

Risk of Default

Another factor that goes into the high interest rate is the risk of default. Many borrowers that fit into the subprime market have a high debt-to-income ratio. This combined with a bad credit score means that they are a high risk of default. As a subprime lender writes loans, they know that there is a certain amount of loans that will go into default. With this information, they have to charge the group as a whole enough money in interest so that they can still make money even with the defaults.

How College Loans Can Turn into Bad Debt

Normally, taking college loans is a great way to both increase your earning potential in the future and build your credit score early in life. Since you will need to take mortgage loans and auto loans after school, taking and paying off a large installment loan can be helpful. However, college loans can quickly become a toxic debt if you do not work to pay them off fast enough. If you are not responsible with the debt, you can find that student loans plague your financial stability for years to come.

Missing Payments in School

While you are attending college, it is easy to lose track of your finances. Most college students do not contribute significant sums toward their student loans while attending school; interest-only payment options are popular during this period of time. Even if you are only responsible interest-only payments, though, missing a loan payment can result in a number of problems. First, there will be financing fees for the missed payment. Second, the missed payment will go against your credit score nearly immediately, and it can remain on your report for years into the future.

Electing Deferment and Grace Periods

Student lenders tend to be very flexible when it comes to grace periods on the debt. They will often allow you to continue to defer loan repayment if you cannot find a job or go to graduate school. While these options appear helpful, they can actually end up costing you thousands of dollars in excess interest. The longer you go without repaying your debts, the higher your debt balance will become. Many student borrowers find they are facing hundreds of thousands of dollars in debt when they are finally done with school and ready to start the process of repaying.

Defaulting on Student Debt

If you find you cannot meet your student debt obligation after graduation, you face defaulting on one of the few large installment debts you will likely take in your entire lifetime. Many students simply assume they will locate a high-paying job after they receive a college degree. Most do go on to earn stable salaries, but many will have different futures. You may choose to work for a non profit company and earn a low salary, or you may elect to go into public service. Federal student loan debts can be reduced in these situations, but private debts will not be. You can easily face default if your income does not cover your payment in a given month.

Carrying Debt for Too Long

Even if you make your payments on time and manage your debts well, taking such a large sum of debt at a young age can be detrimental to your ability to get new loans in the future. This is the biggest risk to those students who will pay back loans slowly through extended or income contingent options. They may carry their debts into midlife, when they are being considered for mortgage loans or other debts. If you have a big student debt balance, your mortgage limits can be reduced significantly.

The Truth behind Car Loan Elimination Scams

There are a number of car loan elimination companies out there that claim that they can get you out of your car loan. While this would be great for you, many times, it is a scam. Here are a few things to consider about car loan elimination scams.

How They Work

Car loan elimination scams are very common. The companies that offer this service usually mass market in order to find people to work with. They will send out mass emails or send flyers out in the mail. They will use a lot of hype and slick advertising to get people to contact them about eliminating their car loan.

When you are very deep in debt, you want to believe that there are some options out there that can help you eliminate your debt. Therefore, this sounds like a pretty great proposal. You hire someone to help you get out of your car loan debt. It is cheaper than paying off the loan, so to you, it makes sense. The only problem is, the process is completely bogus.

You call the company or visit their website and they start to tell you about the process. For a fee that usually amounts to $1000 to $3000, they will show you how to get your car loan eliminated. Most of the time, they will not be handling this process for you. They will only show you how to do it and then let you handle everything. They may provide you with a generic letter that you can show to your creditors. It may say something like "Declaration of Voidance" or "Bond for Discharge of Debt." You are supposed to be able to show your car loan company this document and then they are supposed to just forgive the debt. However, the bad thing is that these documents do not actually work. You pay them the fee, take the documents, and then do what they suggest. As it turns out, the creditor will usually have no idea what you are talking about and ask you to leave.

Principles Behind Argument

When you start to learn about the methods that they tell you to employ, it sounds great. They tell you things like all debt is technically illegal. They tell you that there are court cases that are starting to rule in favor of the debtors as a result of this glitch in the system. They want you to believe that once you sign the loan document, the lender is paid in full. Therefore, they are not out any money when you use this process.

Caution

When approached with an offer like this, you should exercise extreme caution in moving forward. There are a few ways that you can legitimately get rid of debt. You can make your payments and pay it off, you can do a debt settlement, or you can file for bankruptcy. If someone is promising otherwise, you might want to ask for proof before you part with a few thousand dollars.

Expediting Personal Loan Approval with a Cosigner

Expediting a personal loan approval is easy to achieve when you have a cosigner even if your credit score/history is not good. Especially if you manage to bring a co-signer who has excellent credit rate and credit history, getting a personal loan approval gets easier and quicker. You can reduce your interest rate and your repayment terms will be made easy because of the cosigner’s good credit. A parent, spouse of a close friend may be the cosigner.

Who is a Cosigner?

A cosigner will be someone who will sign the loan along with you when you are applying for the required amount of loan. The cosigner will assume the responsibility to repay the loan in case you are not able to repay the loan. Getting a cosigner will help reduce the interest rate and the lender may agree for easier repayment terms. The cosigner should have a good credit rating because he/she is going to repay the loan in case you are defaulting repayment. So first inquire around and make sure of who will be your co-signer and whether their credit has good rating and credit history is good and they have reliable financial standing.

Personal Loan Options

Check with your bank or any financial institution about the available options for loans with a cosigner. Some lenders or banks limit loan options when you bring in a cosigner. So get to know the terms and loan details offered. You need to find loans that will not require the cosigners to put up any collateral for the loans. Because of the co-signer’s better credit history, it should be easy to get an unsecured loan which does not need any upfront collateral deposit.

Getting the Loan

You have to have a steady income and you should be able to prove it as well with employment proof. In spite of the cosigner’s presence to expedite and assure you of the loan, the loaner/bank will need proof of your ability to repay the loan as it is to you they are advancing the loan. Once the proof of income shown and the credit rating and credit history of the cosigner is found to be good, the loan will be sanctioned. Get the loan amount credited into your account.

Advantages of Cosigner

Having a cosigner not only helps you in getting the loan faster, it will give you an edge in negotiating better terms also. Based on the strength of the good credit rating of the cosigner, you can bargain for a lower interest rate with easier repayment options. The cosigner has the overall responsibility to repay even if the debtor has not defaulted; so the lender will comply with your request for better terms.

Tips:

• Take only minimum amount needed as loan.
• Do not abuse the cosigner’s credit rate.
• Try to repay as fast as you can.
• Online lenders charge a higher interest and sometimes are unscrupulous; so check all options.
• Take loan from a reputed lender/ bank, they are more reliable.

What Is a Hard Money Loan?

A hard money loan can be a great alternative source of funding for a number of different projects. Many people are unfamiliar with hard money loans, even though they present borrowers with a viable option for financing. Here are the basics of a hard money loan and how they work.

Hard Money Loans

A hard money loan is a loan that is offered by a private investor. A hard money loan does not conform to the same standards or requirements that come with a traditional loan.

The lending decision usually comes a little bit faster than with a traditional loan because the decision is usually made by one individual. They do not have multiple layers for the loan application to pass through.

Loan Terms

Hard money loans are usually designed to be short-term in nature. They usually also have flexible terms that allow you to pay only interest on the loan. For example, you might have a two-year balloon loan with a hard money loan. This gives you two years of interest-only payments, followed by a balloon payment.

Interest rates of hard money loans are also quite a bit higher than what you could get from a normal lender. Therefore, this type of loan should usually be your last option to consider.

Low-Cost Payday Loan Comparison Shopping Online

If you are looking for a low-cost payday loan, you are going to have many different options to consider. You should be able to find a few payday lenders in your local area. In addition to this, one of the best ways to compare lenders is online. Here are a few things to consider about comparison shopping online for low-cost payday loans.

Low-Cost Payday Loans

There are many different lenders out there that provide this type of loan. With a payday loan, you are going to be taking a certain amount of money while making the promise of paying it back over a short period of time. In most cases, the loan will be for somewhere between two weeks and a month. Many people use these loans to get through lean times until a next paycheck.

Interest Rates

Interest rates on payday loans are notorious for being high. Therefore, you want to be sure to look at the interest rates on loans when you are comparing one lender against the next. In some cases, you can pay as much as an APR of 300 percent for a payday loan. This means that you should take some time to try to find a loan that has a more reasonable rate of interest to work with. Even though you are going to be dealing with the loan for only a short period of time, you still want to save as much money as you can on interest.

Fees

When comparing online payday loan lenders, you want to make sure that you look at their fee structure. In addition to charging you interest, many lenders are going to have various fees that they are going to charge you. For example, you might have to pay an application fee, a set-up fee or some other type of fee to get the loan. You will also want to make sure that you understand how the late fees work with each lender. Some lenders charge so much in late fees that the amount can eclipse the total amount of the loan. Although no one ever plans on being late with payments, being late does happen from time to time. If it happens to you, you do not want to have to pay an unreasonable amount of money in late fees.

Reputation

When looking at different lenders, you want to make sure to check out the company's reputation as well. You are going to be providing your bank account information to this lender so that they can transfer the money to you. This means that you need to be able to trust the lender completely before giving them this sensitive information. Check with the Better Business Bureau and with other site's online reviews to make sure that you can trust a company before getting involved with them.

Business Physical Disaster Loans: Who Is Eligible?

There are many different SBA, or Small Business Administration, loans that could potentially benefit your business. One program is the SBA physical disaster loan program. Here are some of the eligibility requirements for this program.



Disaster Area

One criterion for eligibility is that your business be located within what has been declared a disaster area by the government. This means that if you are located in an area that has been devastated by hurricanes, floods, wildfires or some other type of natural disaster, you are likely qualified. If your business is not located within one of these areas, you would not be able to go any further with the loan process.

Damage

In addition to being located in a disaster area, your business has to actually have some type of damage. If your business is located in the disaster area but did not suffer any actual damage, you would not be able to take advantage of this program. In this case, you might be able to apply for other SBA loans but not the physical disaster loan.

Use of Money

If you plan on taking advantage of this loan, you will have to make sure that you use the money only for its designated purposes. You cannot simply take this loan and use the money for whatever you want. The purpose of this loan is to help repair or replace damaged property or equipment. The SBA wants you to be able to return your business to the condition that it was in before the disaster occurred. With this program, you can repair or replace real property, equipment, machinery, inventory, fixtures and any other business property.

Time Requirements

In order to qualify for this loan, you will also have to work within specific time requirements. After the disaster has been declared by the government, you have a certain amount of time to apply for the loan. If you wait beyond this deadline, you will not be able to gain access to this loan program any longer. At that point, the SBA believes that you must not desperately need their help if you do not take the time to apply right away.

Collateral

With this loan program, you might also be required to put up some type of collateral for the amount of money that you borrow. If the loan is for less than $14,000, then you would not have to put up any collateral. However, if you are dealing with a loan amount in excess of $14,000, you would have to put up some type of collateral for it. This could come in the form of real estate or other business property.