Credit Repair

Often consumers feel overloaded with debt. In reality, many people try to handle too much debt for their available resources. Credit repair is possible but borrowers must be willing to admit that they are in trouble.

Addressing Debt

When it comes to debt, burying your head in the sand will just add to your burden. It does no good to avoid bankers' phone calls. Definitely, it does no good to buy 'more' to try to make yourself feel better about everything. As odd a solution as that may sound, more than one person chooses that route. When you find yourself overloaded with debt, you have to address the situation in a realistic manner.

No Instant Cure

Firstly, do not look for an instant cure. Debt settlement takes time. It makes perfect sense that settlement involves a step-by-step process. Bad credit did not happen overnight but many borrowers expect to escape from its wrath overnight –and with little pain. Credit repair does not work in that way. It takes time and effort.

Not only does bad credit build up over time but the credit can also arise from various sources. When you have major credit cards, department store cards, and maybe a loan agreement or two in your pocket, you have a disorganized mess. That tangle does not just refer to an untidy wallet. A ton of credit can add up to a ton of problems.

Debt Settlement

Yet borrowers can settle their debt. They need not expect it to be an easy process but negotiation is possible with lenders. Debt settlement is an agreement between a borrower and lender that settles the borrower’s debt. The arrangement involves a one-time payment and a lender accepts less than the original loan. The payment can be just 40%-60% of the loan.

Debt settlement can be used to settle varied types of debts - unsecured loans, personal loans, credit card debt, merchant loans, and medical bills. The earlier you request debt settlement, the best chance of the most favourable solution. The process can work better if you employ the services of a credit specialist.

They know how to negotiate with lenders. Credit experts understand the process. It is wise to have a knowledgeable professional in your corner.

Credit Specialists

Don't expect to phone your bank, request settlement, and get immediate agreement. Settling a debt is a complicated business. In fact, most banks refuse the first request.

Keep in mind that you are not the only one looking for debt settlement. A credit expert will be prepared for that initial rejection. They are familiar with the lender's approach and they know how to work within the system.

Lenders are willing to work with buyers – especially with buyers' representatives. As well, the consumer has to be prepared to work with lenders and their credit specialist. All parties must act in good faith. Lenders will put forth certain conditions. In addition, they want borrowers to bring something to the table.

Your credit specialists will work for you. Using a credit expert, you will probably settle for far less than the original debt. Credit experts can help you get maximum savings.

Consumer Proposals

Has Debt Settlement Worked For You?

Today's home buyers are facing a different marketplace than home purchasers in past decades. Even if we look at home buyers during previous economic downturns, today's buyer is not living the same reality. Yet a glaring similarity exists between modern home buyers and purchasers in other decades (or even - centuries) in US history. Home buyers have a dream.

Home Buyer Education Programs

Another fairly common thread between home buyers of the past and present is the challenge of turning that dream into a reality. The path is not always as clear as the dream. In fact, more than one financial expert is convinced that many people do not understand the home buying process. A few US and Canadian organizations are addressing this issue with the introduction of Home Buyer Education Programs.

Realizing The American Dream

Beginning in October, Freedom Debt Management, a non-profit in Boca Raton, has partnered with Citi Group to begin a Home Buyer Education Program. This initiative will help South Florida first time buyers. The company hopes to help 100 families within the first year. Appropriately, the education program, consisting of two four-hour courses, is called, "Realizing The American Dream."

Existing Need

Some people may argue the value, or indeed, the need for such Home Buyer Education Programs. Yet online forums alone suggest that many first-time home buyers are not savvy about the process. Organizing these programs is not being condescending towards the first-time home buyer.

The simple truth is that if individuals never traveled a certain path, or doesn't know the way to get there, they cannot arrive at their destination – at least not in the most efficient manner. Yet some observers question how much first-time home buyers can learn in eight-hour sessions. If the program is well-organized and has valuable content, there is, however, no doubt that a home owner comes out with a better advantage.

The Program

The director of the Boca Raton program explains that their initiative enhances people's concept of saving and budgeting. In addition, the program focuses on possible credit traps, scams, and other threats to one's financial future. Class topics include mortgage affordability, understanding credit, getting a mortgage loan, shopping for a home, and keeping a home, as well as other related subjects.

"Strong financial skills can lead our residents to be able to buy homes, be prepared for financial emergencies, and be more comfortable in retirement, which leads to a stronger and healthier community. We are here to help our residents get their financial future in shape!” says Darish Still, Director of Counseling with Freedom.

Freedom Debt Management, Inc. offers homebuyer education program

Educating The Nation

Of course, Boca Raton is not the only city with a Home Buyer Education Program. The courses (or shorter but similar workshops) are in operation across the US in places such as Stockton and Norwalk. Canadian first time home buyers are also attending classes. Tarion Warranty Corporation offers online New Home Buyer Education Seminars online to help Ontario first-time home owners understand the warranty process and coverages with new homes.

Online education available for new home buyers 

Do You See Value In Home Buyer Education Programs?

Long Term

When home owners take on a mortgage, they agree to a long term commitment. Home buyers should seek out the best professional advice to help them in arranging their mortgage.

Amortization

Mortgages will amortize over a specific period of time. The usual length of a mortgage is 30 years but amortization can be as short as 15 years. On the other hand, mortgages can run longer than 30 years under certain circumstances.

Differences

Mortgages are not all the same. They differ in loan amount, terms, interest rate, and monthly payments. A mortgage must suit individual needs and finances.

Risks

Lenders assess the risk of granting a mortgage to a home owner. Before applying for a mortgage, individuals should try to be in the best possible financial condition. They should work to get their credit rating to the most favorable level. Lenders will reward a good credit rating with a low interest rate.

Market

Just like shopping for any major purchase, people should look for the best deal with their mortgage. Shop around for the lowest interest rate. If all lenders offer the same rate, they might still offer different terms and conditions.

Questions

Borrowers should ask lenders about the mortgage process. Home buyers must be as informed as possible about the steps in getting and managing a mortgage.

Pre-Approval

Pre-approval makes for an easier process down the line. Yet home buyers should not get overenthusiastic about pre-approvals. An individual might be able to get a substantial loan but that does not mean that it is a wise decision to pursue an exorbitant amount.

Down Payment

Generally, lenders require a down payment. The deposit is seen as a portion of the value of the property. If home buyers make a 30% down payment, they have a loan-value ratio of 70%.

Constant Terms

Lenders will offer constant terms to borrowers for a set time – usually ranging anywhere from six months to five years. During this period, interest rates and payments will remain constant despite market fluctuations.

Variable Rate

If a home buyer expects a drop in rates, a variable rate mortgage is a sensible choice. The interest rate will fluctuate according to the market rate.

Payments

Home buyers must be realistic about what they can afford to pay per month. Although a mortgage payment is high priority, so are food, utilities, transportation to work and school, and other basic expenses. The monthly payment should account for only 30% of the gross combined family income.

Rounding Up

Borrowers can ask lenders to round up their mortgage payment - for example, from $141.52 to $160. That $18.48 difference per month might not seem like a big deal but it can add up to thousands over amortization of the mortgage.

Skipping

Skipping a mortgage payment is not a good idea. That action adds to the interest on the outstanding balance. 'Skipping' increases interest costs on the life of the mortgage.

Mortgage Basics

What Question Would You Ask Your Lender About Mortgages?

Low mortgage rates translate to affordable monthly payments in the short term and substantial savings over the life of a loan. As well, low rates make home owners consider refinancing. The cost of the refinance does not seem so bad with savings in the picture.

Drop In Rates

During the past week, the rate on the 30-year fixed mortgage, the most widely-held type, fell from 4.38% to 4.28%. Within the past few days, 15-year fixed mortgage rates dropped from 3.87% to 3.85%. With similar decreases in adjustable rate mortgages (ARMS), it looks like the low mortgage rates might take some of the sting out of the economy in this post-Federal Home Buyers' Tax Credit period. The only catch is that lending guidelines are tighter than ever before and not everyone will qualify for a low rate.

High Credit Score

When it comes to credit and mortgages, the person with the highest credit score (usually 740 and higher) gets the lowest rate. Although a high credit score is not the only requirement to be eligible for a low mortgage rate, it can make a big difference. Borrowers must aim for the more favorable rate because it can make a noticeable impact on monthly payments.

A person with a 760-850 credit score could end up with a monthly payment in the range of $1500; an individual with a 620-639 score might have to pay over $1700 per month. High credit scores can mean huge savings. It is advisable for a borrower to have the best possible credit rating before he approaches a lender.

Debt-to-Income Ratio

As well as that high credit score, borrowers must have a certain debt-to-income ratio. Usually lenders insist that a borrower's overall debt does not exceed 45% of their income. Actually, debt-to-income ratio is given huge consideration in getting low mortgage rates. Even if a person's credit score is less than perfect, a sizeable income (or assets) can turn the tables in their favor.

Few Takers

Despite the low mortgage rates, you need not expect to see every ' home for sale' sign taken down in the next few weeks. Some people are taking advantage of the low mortgage rates but not everyone is taking the plunge. On the surface, low mortgages look like a deal that nobody could (or even should) resist but people worried about unemployment are not in a buying mood.

High Standards

In addition, lenders have those strict guidelines in place. The rules are not written to welcome the person with the low credit score. Of course, it does not follow that an individual with bad credit can never buy a home.

Credit Restoration

Credit repair is always an option and a restored rating can eventually open the doors to a new home. The repair process takes effort and commitment but credit restoration is worth the effort. With a good credit score, you won't miss out on opportunities such as the current low mortgage rates.

Are You Planning To Take Advantage Of The Low Mortgage Rates?