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Wednesday, January 7, 2009

My Credit Card Balance is Zero ? Now What Do I Do?

By William Blake

You have worked hard and paid off that credit card. Now you can start shopping again, right? Hopefully that is not the choice you make. You will be right back where you started. Here are some other options.

* Keep your cards and don't use them. Some experts recommend that you keep accounts open in order to improve your credit rating. This can help, but if you're not using the cards it won't help much. And by keeping the cards, you open up the door for temptation.

If you have accounts that you are not using you will probably not be reviewing them every month. This is a perfect situation for a person who wants to steal your identity. They could do a lot of damage before you ever notice.

*If you are disciplined you could use the card every now and then to keep it active and boost your credit scores. But the temptation would really be there to keep spending until you reach the limit. Then you are back in debt and that is the last place you want to be.

* Close all accounts except for the one with the lowest interest rate, and use it sparingly. This is a popular option. It allows you to have a card to use in case you really need it and to improve your credit rating, yet you don't have multiple cards tempting you.

Even one credit card can get you in trouble if you are not in control. So avoid increased credit limits that give you that extra rope you need to hang yourself.

*If you don't trust your ability to control your spending it is best to close all your credit card accounts and not have access to credit. This may seem a bit extreme but it is better than going back into debt.

The latter should be a last resort because credit cards are helpful in building good credit. They can help improve your financial situation by helping you obtain low interest rate loans when you need them.

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The mortgage market needs somehting but is it just money?

By Chris Clare

With the credit crunch wreaking havoc on the global economy certain governments throughout the world have stepped in with bail out plans involving the injection of money into their individual banking systems. The reason behind this is to stave off the bad or `toxic? debt which they see as crippling to their countries' economies due to unstable institutions and negligible public borrowing.

But the big question on everyone's lips is, will this have the effect of kick starting the institutions lending again, and if it does, what how will it affect the individual and the public in general. The analysis off this problem will be based on the UK as that is where my financial experience stems. The situation within the UK may bare similarities with that of other countries but I am not in the position to comment on whether the outcomes would be similar or not because I would not be as au fait as to how their markets tend to function.

The general public is under the impression that the credit crunch is due to the banks not having enough money to lend. Logic would then dictate that by giving the banks more money the problem is resolved. Unfortunately this is rather far from the truth. The lack of money to lend is only the tip of the iceberg. Banks have been burned by the bad debt accrued over the last few years and are therefore now much more cautious about lending again. Their careless actions in the past will prove much more difficult to rectify in times to come.

House prices are the most important element of the current financial situation, and the prices are dropping fast and are showing no sign of stopping any time soon. Because of this drop in value, lenders are having to be extra vigilant when it comes to lending money from now on. This is particularly relevant when it comes to loan to value (LTV), which is the amount lent in relation to the value of the property. For example, in 2007, lenders were giving 95%, 100% and even 125% of the value of properties.

While the market is buoyant most annalists will agree this type of lending is OK. Think about it if you lend on a 100,000 house 125% which results in a loan of 125,000 and the house price rises over the next three years at a rate of 10% per annum, which was not unheard of. Then your LTV in three years time would only be 93% this is alright from a lending point of view and what would be considered an acceptable risk.

However house prices are not rising by 10% per annum in fact they are falling by at least 10% and some people think that these falls will be worse. So with that in mind if you now lend to someone 85,000 on a 100,000 house in three years your loan could be as high as 118% LTV. This as I am sure you will agree unacceptable lending in this climate. This therefore clearly explains why lenders are unwilling to lend over 90% LTV and in some cases 85%.

So what does this mean to the bailout and the future of the market? Well in my opinion, and I may be right or wrong only time will tell, I think that the bailout will have little effect. Yes the lenders are under a commitment to lend at the levels of 2007 during 2009, but if you understand what has been said in my previous paragraphs they cant lend at the high loan to values. Most of the urgent cases for lending are the people coming out of rates that have been arrange in the last five years, these people are going to be pushing the LTVs due to the current house price falls.

Another thing to consider is the high amount of self certification mortgages that have been arranged over the last 5 years. These types of mortgages will definitely be a rarity because they are seen as to high a risk and the institutions don?t want to know. And even if they are available the LTV will be far lower so what are the consequences in that scenario?

Don?t get me wrong, I am all for the government trying to give the economy a much needed boost, but I just think that the institutions will be unwilling to take the risk on loans at the 2007 and before levels. They will most probably stockpile for the future. This will mean that house prices will continue to spiral downwards due to the LTV not being at a suitable level and the banks will be even more cautious about the type of loans on offer and also the vetting process. It really is a difficult situation and I think that the only way around it if for one of the institutions to bite the bullet and take a calculated risk with regards to their lending.

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How Forward Mortgage Differs From Reverse Mortgage

By Borvonski Vanrock

When many individuals retire, they may acquire much of their income from pensions, social security, and other retirement accounts. However, that is not always enough. Many retirees find themselves falling short no matter how they budget their income.

When this happens, a reverse mortgage line of credit is usually a viable option. What a reverse mortgage allows is the homeowner is able to take their homes equity and convert it into money. Basically, the equity that has been built up throughout the years in the form of mortgage payments is paid back as income to the homeowner.

This is unlike a traditional second mortgage or home equity loan for the fact that there is no required repayment until the borrower no longer uses that home as their primary residence. Also, the older the borrower, the higher the loan can be because of the amount of equity that has accumulated over time.

To acquire a reverse mortgage line of credit, an individual doesnt have to have great credit, nor is a steady income required. The main factor at play here is that the borrower be the owner of the home.

And then there is the opposite of the reverse mortgage, which is the forward mortgage. This mortgage is what people acquire when they are purchasing the home. This is when good credit and a steady income are required. If they payments are made late or not at all, the bank can foreclose upon the home because it is the home that actually secures the mortgage.

As the forward mortgage payments are made, the homes equity grows. This is because the equity is the difference between what has been paid into the mortgage and the original amount of the mortgage. The homeowner will own the home once the final payment has been made.

However, the reverse mortgage is the complete opposite of the forward mortgage. This is because the debt increases as the equity decreases. The borrower is not making monthly payments, but the equity is eaten up because there is interest added to it as the money is paid out to the borrower.

Then there is a time when the reverse mortgage must be paid back and the amount could be large, which is determined by the length of the loan. Other factors include if the home had decreased at any time and there was no equity left to borrow or if the value increased and the amount to be borrowed increased. This could have an impact on the amount of debt because of the amount of money borrowed or not borrowed during these periods.

When it is time to repay the loan, it is usually the result of the homeowner selling the home because they wish to move into an apartment or an assisted living facility for easier living. They have no more use for the home, so it is no longer their primary residence.

For those wondering what the differences are between a reverse mortgage and the traditional forward mortgage, this should clear that up. This should also help you decide whether or not a reverse mortgage is something that can help when money is needed.

Going Back To College, It Can Happen For You

By Mike Carbeck

It is very unusual for a person to graduate from high school with a bad credit record. Most youths do not have any credit record at all, until they apply to college and register for financial aid. This is usually their first foray into the vast world of credit.

As more and more people are applying for college every day, it is not just the high school graduate population that are seeking student loans. Hundreds of thousands of people who seek career advancement know that the only way this will happen is through furthering their education.

Many adults that are re-entering college find themselves needing a student loan, but facing bad credit limits their options. They are forced to seek alternative sources for college funding, because of bad credit choices that have affected their credit rating.

To apply for a student loan means filling out forms and paperwork with the college financial aid office and sending the paperwork over to the US government for processing. There are many reasons a person could be going back to college, it could be for career advancement, job training for a new career or because their existing job has been eliminated or they have been indefinitely laid off.

In this case, many of them will seek out an alternative loan or what is called a bad credit student loan. These types of loans have strict guidelines and rules. There is usually a set of preliminary qualifications that must be met before they can event be guaranteed a loan.

The US government treats education quite seriously and you should never be led to believe you will not be eligible. You will need to make sure you use this money for school and school only and not for shopping or even to pay your credit card debt. There are protocols and rules governing bad credit student loan applications and these rules do not apply to other types of loans or to any debt relief topics.

Your bad credit may put you at risk in the eyes of the US government, so while they may grant you a loan you may not actually receive any money. In cases like this, the check goes directly from the government to the school.

This is done as a method of fraud protection and that the money is not used for anything other than school. This may seem like a harsh reality, but it is a protection system. Never believe that you cannot go back to school, the government has several programs that are designed to assist even the most financially strapped people still be able to pursue their dream of higher education.

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Mortgage Refinance Loans Tips

By John Bear

If you are planning to refinance your home mortgage loan, selecting the right type of mortgage could save you thousands of dollars. Basically, there are two types of mortgage loans to choose from, and it would depend on your financial needs and tolerance for risk. The following are several easy tips that will help you with home loan refinance.

As stated, mortgage refinance loans come in two types: loans with fixed interest rates and loans with adjustable interest rates. Fixed rate mortgages have ten to fifty years of term lengths and will have payments based on an interest rate that will not change for the duration of the loan.

On the other hand, adjustable rate mortgages are specifically based on a financial index, and will include mortgage lenders margin. The other type of mortgage, hybrid loans, are more of a combination of both the fixed rate and adjustable rate mortgages.

The interest rate on your Adjustable Rate Mortgage will only change every time the lender resets your loan. When the lender resets your interest rate and payment amount, they will then use the financial index your loan is tied to plus their own margin. The most common index that is used by mortgage lenders is the one-year treasury note. Adjustable Rate Mortgages have the advantage of lower initial payments, but these loans have more risk for borrowers once the lender begins adjusting the loan.

Homeowners who understand the risks associated with Adjustable Rate Mortgage Refinance Loans will be able to save thousands of dollars when refinancing their mortgage loans. You shouldn't write off Adjustable Rate Mortgages because someone told you that you'll have a payment shock when the lender begins adjusting your loan.

Now, there are several advantages to accepting an adjustable mortgage. As a start, a low rate mortgage will allow buyers to purchase pricier home even while maintaining an affordable monthly payment. And because of the record of low rates, home buyers who obtain an adjustable rate mortgage may enjoy falling rates without even having to refinance their mortgage. Thus, they can avoid the closing costs and other fees.

Adjustable rate mortgages would definitely suit individuals who plan on moving in a few years. Some individuals do enjoy the stability of living in a place for many years. So in this case, fixed rate refinancing would be the best choice, but if somehow you prefer the flexibility of moving every three to five years, then you can save some money with an adjustable rate.

Home mortgage loans can be refinanced whenever you like, and in fact, some lenders suggest that the loan be allowed to mature for at least 12 months. But if you detect a change in the market trends, having to refinance shortly after purchasing your home is a smart move. Contemplating refinancing, you must then be prepared to pay additional closing fees. For more ideas, contact your current lender and inquire of prepayment penalties on your mortgage refinance loans.

Reasons to Take a Free Tax Course

By Avery Mallingham

A free tax course is usually not something that people want to do even when it is free. However, there are many advantages of taking a free tax course. The problem is that most people think tax is not a fun subject and many people think that it is a very complex subject to study.

If you struggle to prepare your tax return, then taking a free tax course will help you immensely. Many people do not know how to fill out a tax form properly because they do not understand why certain information is needed and what the IRS will do with them. Through a tax course, taxpayers will learn how to fill out tax forms accurately.

Many tax courses have fees but if you want to take an online free tax course, you will have to look a little harder. Some companies offer free tax courses so that they can find employees that know things about taxes. You can inquire at tax preparation service companies.

An online free tax course is often the most popular tax course that people take. People find it easier and more comfortable to learn things online, at home without having to leave home. They can do it in their spare time, even at work. If you do not like to work online, you can take evening classes whenever you have time.

You will need to have books to take a free tax course. Some of the tax classes come with free books while others require you to pay a little for them. Sometimes, you can get the books from students that have already graduated from the same class.

There are tax classes that are more comprehensive than others. A free tax course can be short or long. The longer the tax course, the more information there is to be learned. Usually, a long tax course will go into deeper detail of each section of the tax laws which makes the course a little more complicated for the students.

If you can take the whole free tax course, you should try to. However, if you do not have time or feel that the whole course is too difficult for you, it is best to choose what you think you can accomplish. Some people take just a few modules of the free tax course while others take all. You can take whatever you can handle and come back to take more when you are ready.

It is generally a good idea to take a free tax class if you have time and can accept the challenge. A tax class is not very easy because tax laws are complicated. However, if you manage to take the whole course, you will find that filing tax return is easy (!) and you might even be able to get a job with your new found knowledge.

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Lenders Help With Less Than Perfect Credit

By Linda Kay Holt

Bad credit lending has become big business recently. The economy has forced many with pristine credit records to seek alternative lenders for loans. Since many of the major lending companies reject the business of bad credit borrowers, these bad credit lenders specialize in a niche market that grows larger every day.

Since these private companies are taking so much risk in lending cash to somebody who is supposed to be not eligible for more conventional loans, they are in position to charge more for their loans. This is why you will hardly find any which will allow you to negotiate their interest rates to more affordable rates.

Use caution when applying to the numerous bad credit lenders. Many charge for the right to make an application. For the person who badly needs the loan, these bad credit lenders are their only options. Use caution when applying to the numerous bad credit lenders. It could be absolutely devastating to be in a pit of debt and be scammed. So, a thorough research of the company background should help.

Getting new loans from bad credit lenders is possible. It will require some diligence on your part. Be prepared to provide more documentation than what is typical in a traditional loan process.

Lenders know you have less than perfect credit. They will however want to now why. That will have to be provided in a explanation letter. You may have to write several of these letters.

Given proper documentation lenders are more apt to provide a loan. It is likely that you once had good credit and circumstances change in life. Lenders just want to know, you will pay your bills again.

Do not expect those lower rates you have seen advertised. Those rates are reserved for those with pristine credit. You will pay more to secure your loan, but a good payment record over time will allow you to refinance at some point in the future to get that lower rate.

One year of paying your loans on time is all it takes to restore your credit history and insure that you can qualify for more loans in the future.

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The Various Pitfalls of College Loans

By Steve Collins

There are lots of students who could not afford to go to college or to remain in college through their graduate school years without college loans. The fact that these loans are the only factor actively allowing some student to stay in school and graduate makes their value incalculable. The understanding that these loans will not have to be repaid until sometime in the seemingly distant future make college loans even more attractive. But that trying day will come, and a few months after leaving college, students are asked to begin paying back the college education loan.

If you have or are considering applying for college loans, there are a few things you should realize. College education loans are often your initial experience with becoming a borrower. It is essential that former students make it a priority to establish good financial habits. Students credit histories are usually short, and that can be a strike against you should you decide to apply for any other type of loan. Repaying your college education loans on time each month is an excellent way of building a respectable credit history.

You make an agreement to repay all college loans when you take on the money. There are serious penalties to those who disregard that fact. If you do not make your monthly payments, your credit report will reflect that for many years, making it incredibly difficult to get a car or home loan.

Your wages can be garnished. You can even be denied any tax refunds due you. College loans are not so much fun after you actually graduate college, so if you have not applied yet, you might want to consider how much money you really want to borrow.

College loans afford excellent opportunities, but they come with serious adult expectations. Do not treat them lightly. They cannot only get you through college; they can be your initial introduction into the world of financial responsibility. Think of it as a way of proving yourself. Who knows? Responsible repayment of student loans may make you attractive to potential lenders, even with a brief history of financial behavior.

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Take Out A Personal Loan If You Need Fast Cash

By Trinity Davidson

If you find yourself needing money quickly, fast cash personal loans can be a smart way to go. They can help you to cover unexpected bills, medical expenses, or to pay for anything else.

If you need less than $1,000 to cover your unexpected expenses, you may want to think about securing a payday loan. This can help you to float until your next paycheck and will get your expenses covered.

If you need money quickly, this is the way to go. Just be sure that you will be able to pay back the money on time and in full to avoid paying more interest than necessary. With this kind of loan, you will find out if you are approved or not very quickly. Most lending sources will let you know within a few hours if you qualify or not. If you do qualify, they will most likely be able to deposit the loan amount in full directly to your savings or checking account within one day.

If you need more money than what you can qualify for with an unsecured loan, you might still have an option. Some lending institutions will let you offer your car title as collateral allowing you to borrow more money. This can be really risky though since now your vehicle is on the line. Understand that if you fail to make payments on time and in full, you will probably lose your car.

Because of this, you will want to make sure you dont borrow more than you need, and especially more than you can afford to pay back. No matter how fast you get the money, it wont be worth it if you end up losing your car. But if you can realistically make the loan payments, then you might decide that this type of loan is exactly what you need.

Most lending sources will offer these loans on a short-term basis. Usually, you will need to pay them back within a couple of weeks. If you need a longer pay schedule, be sure to negotiate that up front. You will want to be clear on the terms and conditions so you dont inadvertently default on the loan. Now that you have the basic information, you can decide for yourself if a fast cash personal loan is the right step for you.

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