Good Credit is King, When Qualifying for Mortgage Programs
If you want to purchase a new home or refinance your current mortgage, be sure to check out the wide array of loan programs available. If you have less than excellent or even poor credit, you can still qualify for a loan. If you have outstanding credit, though, you are in the proverbial driver’s seat, when it comes to selecting your loan program. Be sure to find a good mortgage consultant, and carefully explain exactly what you need. Here are just a couple of “outside-the-box” programs that come in handy for some people but require excellent credit ratings.
Stated loan programs are designed for a person whose income or assets fluctuate from month to month and year to year. Not many banks offer stated programs. Many people who need stated programs get turned down by not only banks but by inexperienced mortgage brokers who don’t understand the breadth of the programs at their fingertips. So, you may have to enlighten them with your own insight by telling them this is the program you need.
Stated programs are for people who may not qualify for a conventional loan, because they do not meet income requirements a lender has. A prime example is someone who does not show all of her income on a W-2 tax return, for one reason or another. This person may make enough money to cover the mortgage payment, but she can’t prove she makes it on paper. Lenders like to see two years of W-2 income. This proves to them that you consistently make enough money to pay back the loan. Now, it’s important to note that this is a good credit program, and a lender will want someone with at least A-minus credit for approval. Here is where all that work to maintain your spartan credit record is going to pay off.
What the stated loan requires is all standard documents, except income verification. In other words, the loan officer is going to state your income on the application, and no proof is required. Please note that this program is not intended for someone who works at McDonalds to try to state that he makes $200,000 yearly, so he can get approved for a $400,000 loan. It is intended for people, like salesmen, whose income varies or for businessmen, who work on bonuses, which they may not receive until the next year. As long as the income is reasonable for the profession, no underwriter will ever question it. So, if you needed to make 60,000 yearly for approval, but you only show $54,000 on last year’s W-2, your mortgage broker can get you a stated income program, and he will simply write $60,00 on the application. Don’t worry, the lender won’t ask for pay stubs or tax returns. Your credit rating speaks for itself. In other words, the lender sees that you have an excellent payment history on your other debts, so he is willing to take on a bit more risk.
A stated asset program works the same way, and good credit is required for approval in this program, too. Lenders require cash reserves, in order to cover several months of mortgage payments, in the event something goes wrong after the loan closes, like you lose your job or get hurt. This can be a problem for people who have no savings, stocks, or retirement accounts, which are all acceptable forms of reserves. If you fall into this category, you simply ask for a stated asset loan, and the mortgage broker will state enough assets on your loan application to appease the lender.
This seems fraudulent, you might say. It isn’t, as long as you follow the guidelines set forth by the lenders. Remember, they created these programs, so they could loan more money. You’ll pay, of course, because the lender will hit you with a premium on your rate, because the loan is more of a risk. So, instead of getting a 6% rate, you might get as high as 6.75%, but at least you’ll get your loan.
There are many other loan programs that allow you to borrow more of the equity in the house, let’s say up to 95% or even 100%, due to a great credit rating. Some programs allow for an improvement on your interest rate.
It’s always important to ask your mortgage broker if there is some kind of incentive because you have A or A+ credit. Most lenders allow the mortgage broker to either give you the break in rate, or they’ll give it to the broker in a cash commission. Many unscrupulous brokers will never mention the credit bonus to you, and they’ll make up to .25% of the loan amount for themselves.
So, if you had a $200,000 loan, and the lender allowed a .25% interest reduction or commission to the broker, and the broker takes it, instead of giving it to you, that mortgage broker would make $500.00 extra dollars, which would be paid by the lender. Of course, if you had received the .25% better rate, your payment would decrease by about $30.00 each month and $360.00 each year. That’s nearly $2,000 if you have the loan for five years that you would lose to a greedy mortgage broker. So, always ask for something, due to your excellent credit.
And always remember, with good credit, you are king. And kings always make the rules. Learn more at www.winningthemortgagegame.com
Mark Barnes is author of the wealth-building system, Winning the Mortgage Game and other investment real estate books. He is also a suspense novelist, and his new novel, The League, will thrill both suspense and sports fans. Learn about Mark’s wealth-building system and get his free home loan course at http://www.winningthemortgagegame.com. Learn more about The League and read an excerpt at http://www.sportsnovels.com
Prepaid Visa and MasterCard Debit Cards (aka “Prepaid Credit Cards”)
Nowadays there are many options to carrying cash, and the one choice that is gaining popularity is the Prepaid Debit Card, also known as the Prepaid Credit Card. Although these debit cards are being advertised on television, radio and the internet, their use and purpose is clouded in mystery. We will explain what they are and how to use the prepaid debit card.
Terms to Know
• Branding - Adding Visa or MasterCard logo to a debit card, thereby backing the debit card with the benefits and security of these credit card companies.
• Debit - Deducting from an existing balance.
• Load - Adding money to the balance of the card.
• Reload - Ability to add more money to the balance once the original ‘loaded’ balance has been depleted.
“Prepaid Credit Card” - Debunking the Myth
First, we will clear up the most common misconception with these cards. They are not credit cards in the traditional sense. A “traditional” credit card is a card that draws off a credit line balance with each use/purchase. A prepaid debit card is a card with either a Visa or MasterCard logo and can be used to pay for goods or services anywhere Visa or MasterCard is accepted, however all purchases are drawn from a prepaid balance that you have loaded onto the card. Once the balance has reached $0, you are no longer able to use the card for purchasing until the balance is reloaded.
Evolution of an Industry
In the beginning, in terms of banking, there was an Automated Teller Machine debit card. This type of card allowed the holder to access their bank account balance without having to physically go into the bank. The ATM card holder was able to go to a new type of cash access point (the Automated Teller Machine) usually located outside their bank and get cash out, debiting from the available cash balance of their bank account. As this new type of bank account debiting system evolved, merchants and banks teamed up to allow ATM card holders to access their bank accounts at various locations, such as a grocery store or other kiosk ATM machines located around town.
Through gradual progression of the financial industry, Visa and MasterCard got involved and joined the efforts of banks and merchants to brand the ATM card with either the Visa or MasterCard logo. These new Visa or MasterCard branded ATM debit cards now had the ability to be used to pay for goods and services anywhere a Visa or MasterCard credit card was accepted, while still drawing off the bank account balance the ATM card is associated with.
The next step for Visa and MasterCard was to create standalone “Gift Cards”, which were originally loaded with a prepaid balance and could be used just as a Visa or MasterCard, but purchases were debited from the actual prepaid balance, and required no bank account. These Gift Cards could not have their balance reloaded.
This brings us current to today’s financial landscape, where Visa and MasterCard have introduced prepaid debit cards, which operate like a hybrid ATM card (minus the bank account) and Gift Card (but the balance can be re-added to). The card holder can load money onto the debit card, can access the balance anywhere that Visa and MasterCard is accepted, and can reload money onto the card balance.
The Visa or MasterCard Prepaid Debit Card
Now that you have a good idea of what a prepaid debit card is (and what it isn’t), it’s time to find out what the benefits are of having this new type of debit card.
Features and Benefits
• No Credit Check - A credit check is required when you apply for credit, since you are going to be trusted to pay the debt back. Since you are adding cash onto the card, and since the balance cannot go into the negative, you are not going to be in a situation where you are required to pay anything back, or owe any money from exceeding the balance.
• Safety and Security - Carrying cash nowadays is a risky venture. If you lose cash, you are out that amount of money and cannot conceivably recover the amount. Since you can load or reload the balance of a prepaid card with cash (almost anywhere), and since the cash balance on the card is branded by either the Visa or MasterCard logo, the same security and fraud protection is extended to the prepaid balance. If the card is lost or stolen, the prepaid card holder is not held liable for any fraudulent transactions. Your money is safe and secure.
• Bank Account Features - Most prepaid debit cards have bank account features, such as check writing privileges (the amount of the check is deducted from the card balance). You can also have your employer (although employment is not required to apply for card) directly deposit your payroll check onto the card balance. Since these are very attractive incentives, most prepaid debit cards have these features.
• Reload the Balance Anywhere - Most prepaid debit cards allow you to reload the balance almost anywhere. You can load via PayPal, at most bank branches, any Western Union or MoneyGram location and even by cashiers check or money order.
• Shopping on the Internet - Nowadays, you can’t be too safe when shopping online. Prepaid debit cards are a great choice in this situation because you can determine how much to load onto the card and since the balance cannot go into the negative, the chances of someone accessing your card information and running up a horrendous debt are non-existent.
• Other Benefits and Features - Since prepaid debit cards are branded with either the Visa or MasterCard logs, the prepaid cards have the same perks of regular credit cards. Some of these perks include roadside assistance, auto rental insurance, extensions on original manufacturer warranties, automatic bill pay and even merchandise rewards and cash rebates.
The Bottom Line
The best way to carry cash nowadays is a prepaid debit card. It’s also a great way to give a gift or pay kids an allowance. As a gift, the prepaid card is an excellent choice because the prepaid card is accepted anywhere, and doesn’t limit the recipient to one particular store or service. As a child’s allowance tool its ideal, since the transactions on a prepaid debit card can be tracked and accounted for, down to the last penny. As an online shopping resource, it’s handy because the card balance cannot be exploited. As a straight cash card, it can be used anywhere and just as safe as a credit card.
Good luck and remember to read all the facts and find out all the information before making important financial decisions.
This article was written by Gus Garcia, owner of http://www.creditcardChoices.com, a free online service offering information about various credit and debit card offers as well as links to credit and debit card applications.
Click here to see all prepaid debit cards available at creditcardChoices.com
5 Simple Tips For Getting Out Of Debt In 2006!
Is credit card debt driving you crazy? Spent too much this holiday season?
Well, you’re definitely not alone. Credit card debt is a way of life these days. Especially now, right after the holidays!
For many people, money gets REAL tight this time of year - we need to pay for all the holiday gifts, get ready for tax season…
Ahhhh!
What can you do if debt has taken over your life?
Make getting out of debt your New Year’s Resolution for 2006!
Here are 5 simple tips for getting out of debt. Keeping a New Year’s Resolution is difficult. But if you follow these tips, you’ll be prepared for a prosperous 2006!
1) Write down your goal and make a plan for achieving it!
The first step to getting out of debt is by far the most important - you need to:
• make a commitment to get out of debt
• write it down
• and come up with a plan for reaching it!
Hey, you didn’t get into debt overnight, and you won’t get out overnight, either. But if you want to get out of debt - if you REALLY want to get out of debt, you need to have a plan. And you need to stick with it.
2) Seriously consider using a debt reduction program
If you have the discipline to get out of debt on your own, without any help, then good for you! But if you’re like most people, a little help will go a long way. Here are a few debt reduction programs to consider:
• Credit counseling: If you have high interest rates on your credit cards, working with a non-profit company will help you lower those high rates, and combine your credit card bills into one lower monthly payment - which means more of your money will go towards reducing your debt!
• Debt consolidation loan: If you own a home, you can consider taking out a home equity loan to pay off all your credit card bills, lower you interest rates, and possibly deduct the interest on your taxes (but check with your tax professional on this one).
• Debt settlement: If nothing else is working, and your debt is still overwhelming, then you should consider debt settlement. This is a more aggressive approach, and is not right for everyone, but if you’re considering bankruptcy, this is a good option. You can pay off all your credit card bills at a savings of 40-60%, and get out of debt much quicker.
3) Start fixing your credit problems
Many people think that anything that goes on your credit report stays there for 7 years. Well, that’s not always true. I got a bunch of negative credit items off my credit report - all I did was get a copy of my credit report, and ask the credit bureaus to remove the “bad stuff”. In just a few months, my credit was almost back to normal. There’s nothing that says we must pay for our mistakes forever (or even for 7 years)!
4) Cut down your monthly expenses
If you overdid the spending in 2005, then it’s time to cut out all the expenses you don’t need, and use the money you save to pay off your credit card bills. Take a look at your checking and savings account statements, your credit card statements, and your monthly bills. Then start looking for things to cut. I know, I know, it’s hard to live without cable TV, cell phones, internet access, the morning paper, weekend dinners and entertainment. BUT DO IT ANYWAY - at least until you get your debt back under control!
5) Make some extra spending money
Sometimes making more money is the best answer! There are lots of ways to make money - selling some of your valuables, getting a part-time job, starting your own business. Despite some of the ads you read, there’s no really secret to making money - you just need to find something you like to do, and work hard at it!
6) Think positive!
OK, there were only supposed to be 5 tips, but this one is the best one - no matter how hard life can get, no matter how much debt you have, the one thing in life you can control the most is how you think. So rather than focusing on what you don’t have, be thankful for all that you do have. Nobody dies wishing they had made more money or worked longer. But many people do regret all the fun and meaningful things THEY DID NOT DO! So make some time to have fun, think positive, and find little ways to enjoy life EVERY SINGLE DAY you are here on plant Earth!
Wondering what makes me an expert on debt? Well, I lived through it. I know what it feels like to struggle. And I know what it feels like to overcome financial problems. There’s nothing special about me. I work at a college, so I don’t make a heck of a lot of money. I didn’t win the lottery. And no rich relatives left me a pile of money.
I just learned a few simple strategies - actually, I learned the 5 tips you just read about - and stuck with them until my life changed for the better.
And you can, too - just follow the tips above, believe in yourself, and DON’T LET ANYONE OR ANYTHING STOP YOU FROM REACHING YOUR GOALS in life!
Kris Bickell is the owner of www.Debt-Tips.com, a helpful site for consumers struggling with credit card debt. For more tips on getting out of debt, repairing your credit, saving money, and making extra money online, sign up for the free course “5 Simple Tips For Getting Out Of Debt Faster & Saving A Ton Of Money!” at: www.Debt-Tips.com/.
What You Need to Know About Secured Credit Cards
There’s so much to learn about the different credit cards made available to the public today. First of all, it’s important to choose a credit card that aims to work for you and your lifestyle. Make it easy on yourself. If you do the research before committing and establish what you want to use a credit card for, the rest is easy.
Secured credit cards are used in a number of ways. They’re convenient because they are used like a regular credit card. However, there is a difference between these credit cards and regular credit cards. These credit cards are secured. If you want a secured credit card, you’ll need to put down cash as collateral in order to secure one. It’s like making a personal deposit. That deposit becomes your line of credit, available to use when you need it the most. Credit cards that are secured, often times, contain limits as to how much you can deposit on the card at any given time. Most cards will hold up to $500.00. Depending on the credit card company, they may allow you to deposit more. In the end, the bank will reward you for making payments on your credit card - payments which have already been established because it’s coming from you in advance as a requirement of using the card. Therefore, owning a secured card will actually help you to establish a good credit rating. In fact, it is the perfect way to get your credit back on track if you’re suffering with poor, bad or no credit.
Make sure to shop around for your secured card. Every company offers different perks and services, which get attached to your card. That is why it is important to do your research first. Establish what’s important. How do you plan to use your credit card? Where will you make the majority of your purchases? Most importantly, you’ll decide how best this card will work for you and your current situation. Make sure that whatever card you choose, that the supplier reports your history to credit bureaus. Otherwise, your card isn’t helping you build credit, and that is one of the most important factors in using a secured credit card. You will establish good credit and improve your credit rating considerably. You also avoid the risk of running into debt again, because you control what you spend.
No-one will ever know that your credit card is prepaid. You can use it in your favorite restaurant and it will look just like any other card. Prepaid credit cards are one of the best ways to make your purchases without the risk of spending more than you can afford. You are completely in the driver’s seat.
©Copyright 2005. Caitlin Crosain is a successful writer and publisher of resource websites on how to Repair Bad Credit and qualify for Secured Credit Cards and Personal Loans
Useful Tips When Choosing Credit Cards
Chances are you have received your share of “pre-approved” credit card offers in the mail, some with low introductory rates and other perks. Many of these solicitations urge you to accept “before the offer expires.” Before you accept, shop around to get the best deal.
Credit Card Terms:
A credit card is a form of borrowing that often involves charges. Credit terms and conditions affect your overall cost. So it’s wise to compare terms and fees before you agree to open a credit or charge card account. The following are some important terms to consider that generally must be disclosed in credit card applications or in solicitations that require no application.
Annual Percentage Rate: The APR is a measure of the cost of credit, expressed as a yearly rate. It also must be disclosed before you become obligated on the account and on your account statements. Some credit card plans allow the issuer to change your APR when interest rates or other economic indicators - called indexes - change. Because the rate change is linked to the index’s performance, these plans are called “variable rate” programs.
Free Period: Also called a “grace period,” a free period lets you avoid finance charges by paying your balance in full before the due date. Knowing whether a card gives you a free period is especially important if you plan to pay your account in full each month. Without a free period, the card issuer may impose a finance charge from the date you use your card or from the date each transaction is posted to your account. If your card includes a free period, the issuer must mail your bill at least 14 days before the due date so you’ll have enough time to pay.
Annual Fees: Most issuers charge annual membership or participation fees.
Transaction Fees and Other Charges: A card may include other costs. Some issuers charge a fee if you use the card to get a cash advance, make a late payment, or exceed your credit limit. Some charge a monthly fee whether or not you use the card.
Other Costs and Features:
Credit terms vary among issuers. When shopping for a card, think about how you plan to use it. If you expect to pay your bills in full each month, the annual fee and other charges may be more important than the periodic rate and the APR, if there is a grace period for purchases. However, if you use the cash advance feature, many cards do not permit a grace period for the amounts due - even if they have a grace period for purchases. So, it may still be wise to consider the APR and balance computation method. Also, if you plan to pay for purchases over time, the APR and the balance computation method are definitely major considerations.
You’ll probably also want to consider if the credit limit is high enough, how widely the card is accepted, and the plan’s services and features.
Useful Tips:
Keep these tips in mind when looking for or using a credit or charge card.
• Shop around for the plan that best fits your needs.
• Make sure you understand a plan’s terms before you accept the card.
• Hold on to receipts to reconcile charges when your bill arrives.
• Protect your cards and account numbers to prevent unauthorized use.
• Draw a line through blank spaces on charge slips so the amount can’t be changed.
• Keep a record - in a safe place separate from your cards - of your account numbers, expiration dates and the phone numbers of each issuer to report a loss quickly.
• Carry only the cards you think you’ll use.
You may freely reprint this article provided the author’s biography remains intact:
John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.