Subprime mortgages and a past bankruptcy

Even with a Chapter 7 bankruptcy in your credit report you can still qualify for a sub-prime mortgage. Once approved, you can then use your mortgage to improve your credit history, qualifying you for lower interest rates in the future. The Effects of a Bankruptcy A bankruptcy will affect your credit score based on how long ago it was. So a bankruptcy discharged less than a year ago will qualify you for a D loan. These types of loans usually require 30% down and a high interest rate. By waiting a year after a bankruptcy, you can qualify for a B or C loan with their lower rates and down payment requirements. If you wait two years, you can qualify for a FHA home loan. In four years, you can qualify for a conventional loan. Besides your bankruptcy record, financing companies will want to see a steady payment history. This includes your credit and rent payments. Cash reserves for six to twelve months will also offset your credit risk. Search For Lenders Not all sub-prime lenders evaluate borrowers the same way. So you may qualify for a B loan with one lender and a C lender with another. To find who will offer you the best financing, you will need to request quotes from several lenders. You can request quotes over the phone or online. Online sites will provide a fairly accurate quote based on the generic information you provide. You can also use free mortgage broker sites which provide home loan quotes from several different financing companies. Before You Apply Before you apply for your mortgage, make sure that all accounts involved in your bankruptcy have been closed. You can request a copy of your credit report from the reporting agencies to check your information. You may also consider including a letter in your report explaining the circumstances of your bankruptcy. Some lenders will look more favorably on your account if illness or job loss affected your finances. After Your Mortgage Once you have purchased your home, plan on rebuilding your credit history by making regular payments. Within two years you may qualify for a conventional mortgage with low rates.

The 411 on getting a student debt consolidation loan

Rising tuition fees have given rise to students having to take student loans. However, these high student loans give a high impact on the day to day lives of the students. This gives rise to difficult financial situations for the student during and after their studies. This is the reason students turn to student debt consolidation loan to rid themselves of the burden of the student loans. Student debt consolidation loan means having the multiple student loans replaced with a single loan with a lower monthly payment scheme to be paid over a longer repayment period. Though a student debt consolidation loan is beneficial, it is important to know its pros and cons before signing up for one. The huge students’ loans have an impact on your future decisions and on your credit history. So make it a point to have your student loan debt not exceed 8% of your income to get a good credit history. There are many types of student loans, but the most common student loans are the private and federal loans. It is not advisable to go in for student debt consolidation loan by mixing these two loans together. Instead, it is better to consolidate the federal student loans and then the private loans, separately. This is because when consolidating both these kinds of loans, the federal loan benefits will all be lost. For one to be eligible for consolidating his/her student loans, it is important that the person is no longer enrolled in a school. The person should also be repaying the debt or at least be in the grace period of the loan. Through student debt consolidation loan, instead of making multiple payments to all your lenders, there is only one debt consolidation company to whom you have to make your payments. It is the job of this company to pay off your lenders. Interest rates are lowered as the debt consolidation is a second mortgage, which has lower interest rates. Lower interest rates lead to lower monthly payments. And with only one payment, the monthly installment will be lower too. As you only have to pay a single person, all clarifications can be made through only one person instead of approaching all your lenders. All things have their share of good things and bad points. There is always a chance of falling into more debt with student debt consolidation loan. This is because there is only one payment to be made, with more money remaining at the end of the month. This may prompt you to use your credit cards and spend money again. Student debt consolidation programs take a long time to cover, so you will be spending a good number of years repaying the loan. Moreover, though the interest rate of the student debt consolidation loan is low, over the long loan period, you will actually be spending more than you would have spent if you had retained the individual loans. As consolidation loans are secured loans, you stand a chance of losing whatever you keep as security if you don’t repay the loan. So it can be seen that though student debt consolidation loan is beneficial, it also has its drawbacks. It is up to the individual to decide whether to opt for student debt consolidation loan or not.

Secured debts why your house mortgage must not be overlooked

A simplify definition of debts are money due or own to people under an express agreement to repay. They usually arise because of a service or goods provided to you. While it seem logical that all debts involved around money owned to others. There are in fact 2 different types of debts as far as your financial health is concerned. They are secured and unsecured debts. Identifying your debts and classifying them into secured and unsecured debts are important. The reason being you will have more to lose financially if you ignored on your secured debts. Secured debts refer to any loan or credit that was obtained by allowing your lenders to put a lien on a piece of valuable property that you own. These properties can be your house, auto, yacht and even expensive jewelries. Properties put on lien are also known as collateral. A secured loan amount is usually based on the valuation of the property, and is based on the principle that if you fail to pay or default on your payment, your lender has the right to repossess and confiscate the property to recover their loan amount owned. Your house and auto loan are most likely secured loan. Losing a collateral put up for a loan is to be avoided whenever possible. When that happens, you also lose all the payment that you have already made on that collateral asset. The worse part is that you are also liable if the sales of that collateral do not cover the loan amount that you own. When you lose your collateral especially your house which is known as foreclosure, it will affect your financial health greatly as there is nothing that will hurt your credit rating more than a foreclosure. Even bankruptcy does not cause so many damages. Be it foreclosure or your auto being repossess, a secured loan will drain you up excessively if not handled properly, It is wise to prioritize your secured loans and mortgage payment whenever possible.