Scoping out good credit advice? Here are the primary rules of credit

When the economy gets as tight as it is today, so do banks. We hear news reports that the credit crunch has now hit the banks. Banks are no longer willing to extend the generous credit limits of the past.

Your APR may rise overnight due a late or skipped payment, no matter how long you've maintained a gleaming payment record. Plenty of folks find themselves taking a cash advance on one credit card, to make the minimum payment on another. Cash advances mean a transaction fee, while making the minimum payment on the other barely keeps you afloat until the next payments are due. This type of activity can put you in a downward spiral which ends unhappily. Your credit rating goes down, your rates go up and you've got a mess on your hands.

While this is not a pretty picture, your need for credit advice is becoming obvious. You know you can't continue this way, but what can you do?

If you were to sit down with your kids and try to give them your best credit advice, what would you say? You've been there, done that, and the credit advice you give them will be the voice of experience. Learn to follow your own advice. Here are the cardinal rules of credit.

1.If you can't afford to pay cash for an item, don't purchase it. If you reserve the use of credit cards to purchases such as gasoline, clothing and regular expenditures for which you already have cash in hand, you can maintain a credit history and good credit rating by setting that cash aside and paying off those credit cards each month.
2.Emergency expenditures do crop up. You may need a root canal for which your insurance only pays a limited amount. A credit card may be used sensibly for such purposes. Our credit advice in this situation? Adjust your monthly budget and pay it off in the shortest period of time. It may be tantalizing to make that minimum payment, but it may take a year to pay it off. The interest alone may turn that root canal into a $1000 deal.
3.Almost everyone ignores this judicious bit of credit advice: Do not finance holiday shopping on a credit card! Sure, you require your kindred to enjoy the great gifts you can put on a credit card. However, you don't want them to suffer six months down the road when you're unable to pay for essentials.
4.No matter how tight your budget is, almost everyone can afford to put aside $10 a week in a savings account. Not much, but in a year's time, you can pay cash for that root canal!

In a nutshell, our unsurpassed credit advice isn't to live beyond your means. Establish a savings plan, no matter how modest. You never know what life may throw your way.

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Mortgages Explained

If you were to be asked to describe and give a definition for the word mortgage, would you be able to, because it is surprising how few people know what they really are. Some people have gotten into the habit of calling them mortgage home loans but that isn't right at all as they are not loans at all. The mortgage is basically a way of securing a debt to which the property is the security with the mortgagor as the person who will owe money to the mortgagor. More accurately, it is a document that protects your lender's interest with your property itself and a legal agreement you have provided to a lender.

If it wasn't for the availability of mortgages, individuals and businesses would need to find the full amount for a property in order to purchase it. There are also misconceptions about how they work so below is a description of how the process works.

Unfortunately it is our own common use of word like Borrower and Lender that has mislead people into thinking a mortgage is a loan when they should be referred to as Mortgagor and Mortgagee respectively. The security is in fact a lien which means the mortgagee has legal possession of your property until the debt is repaid.


This system works so successfully because the risk of loss on the part of the mortgagee is all but eliminated as they have legal possession of the property until the debt is completely repaid. The lien (document) is normally recorded at the local courthouse in the public records section.


So how this works is that the mortgagor (you) owns the property completely even though the mortgagee has possession of the mortgage but not the title.


This means the only occasion that can arise whereby the mortgagee can legally sell your home is if you stop making payments and it needs to be sold to repay the finance used to purchase it. This is the dreaded process referred to as foreclosure but if the property is used as security, then the foreclosure must go through the court system.

This is a legally recognized process that must take place often referred to as 'judicial foreclosure'. Obviously there is much more to the subject than this, but these are the basic foundations upon which the mortgaging system has been constructed.

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How To Stop A Repossession

 

This article will outline the steps you can take to stop a repossession. It assumes that notice of eviction has been issued by the court bailiffs giving a date and when eviction will occur. If you are not sure if you are at this stage please contact the national debt helpline.

If you have been given a notice of eviction you may be able to stop this, but you must act quickly.

Which forms you need to fill out

If you need more time to sell, to find somewhere else to live, or want to make a revised offer to pay the arrears by monthly instalments you should apply for the warrant to be suspended on court form N244.You can pick up this form from your local county court.

When you fill in the N244 form remember to:

• Write the claim number of the case
  
• Write the warrant number
  
• Include the reason you have not been able to pay and your new offer (in part A on the front of the form)
  
• Tick the box in part B saying you rely on evidence in part C
  
• Attach your personal budget or write it out on the form in in part C on the back of the form
  
• Sign the statement of truth at the end of the form
  

Do this as soon as possible to allow the court time to arrange a hearing.

The court will set a date for a hearing, usually before the eviction date. It is imperative you go to this hearing or the court is unlikely to suspend the warrant.

If any further warrants are issued at this hearing you may still be able to ask the court to suspend them (for example, to give you time to find somewhere else to live). If all your efforts to stay in the property fail, you will be given an eviction date.

When the bailiffs come

Bailiffs have the power to force their way into your home if they have to so you need to move out before this date if you have not been able to stop the eviction. If they arrive when you are there you will have very little time to pack up your belongings and will only be able to return to pack up a couple of weeks later.  You will then have to get the lenders permission to enter the property again in the future and arrange to remove your furniture. Some lenders try to arguethat they can keep any belongings left in the house. It is safer so remove all that you can before the eviction date.

After your eviction your lender will still add interest to your mortgage until the property is sold. They are obliged by FSA rules to sell your home fast for the best price but in reality their need to get a quick sale to recover their money means that it is likely to sell a lot lower than the price you could receive on the open market. They may sell it anything from 15% - 40% below the market value of the property.

The proceeds from the sale are used to pay off the court costs, the estate agents and solicitors bills, the mortgage and any second or third mortgages. The lender must tell you in writing how the money has been spent.

When will the nightmare end?

They must send you any money which is left over but if not enough was raised on the sale of the property to pay off all secured debts and costs you will still owe money to the lender. Due to repossessed properties being sold below their market value this is all to common unfortunately.

 You do not want to get to this situation so take action as soon as possible by trying to pay off the arrears, selling your property before you get evicted (so you get a better price) or selling and renting back your property so you can stay there.

 

Can You Really Buy a Home After a Bankruptcy?

Don't assume your chances to get a loan are gone, but follow these tips for your best chance of getting a mortgage. On the contrary, some lending companies do provide mortgage loans to those who have a history with financial difficulties. With some effort, you may still be able to get that mortgage for your dream home.

It is recommended to forgo getting a loan within a span of 2 to 3 years. These times will be well spent in repairing your damaged credit rating, and will allow you ample time to start over again from scratch.  In the meantime, you still can move into your dream home.  Places like BadCreditHomeFinder.com can help you own a home while you fix your credit.

Fix the problem

A damaged credit rating is a big obstacle to buying a home, but that does not mean you should give up. If you follow the traditional route to buying a home, repairing your credit is a must. Here are some steps on how to restore your negative credit rating:

1. Try to get a credit report and check out each item carefully. Take note of those transactions which gives you a negative credit rating. Paying online can help you keep your payments on time. This might take some time depending on the number of transactions you made with late payments, but everything will all add up in the long run.

2. It is quite possible to obtain a loan even after foreclosure and bankruptcy issues; it is true that its impossible to get low interest rates from lending companies on the first hand; but as you continue to do on-time payments then you are well on your way to repairing your damaged credit. If the company notices that you've been making on-time payment on a regular basis then they might award you by lowering your interest rates.

3. Getting a new and secured credit card is a good way to improve your credit rating. Try to make on time payments with your new credit card for a year to show the lending organization that you are financially stable and your past woes are now erased from history.

Finding a lender for your new home

It will be quite difficult in finding a new mortgage lender that will provide you with the best deals for your dream home, but never impossible. It is true that your past bout with foreclosure and bankruptcy damaged your credit thus earning you higher interest rates than normal from lenders around the city.

There are two ways to go for a loan even with a damaged credit: one, you can scout around for lenders with manageable interest rates and continually pay on-time so that they can lower the interest rates with your timely payments. Second, you can scout around for various lenders who are willing to give people with bad credit another chance at life.

Researching online will reveal many lenders who may be willing to qualify you for a loan. Online mortgage brokers will go out of their way to help you out even if you have a damaged credit record. Also, some online lending companies give low interest rates even to ones with bad credit record; try to keep an eye out for these sites since you can get back to them later to compare terms and agreements, conditions and interest rates.

If traditional lenders fail

Your best bet would be to think outside the normal avenues.  Sites like BadCreditHomeFinder.com can help you get into a home while you improve your credit. 

More often than not, traditional lenders will refuse to do business with people with bad credit records, especially those who just came out from foreclosure and bankruptcy; then one option you have is through sub prime mortgage loan lenders.  Although the current environment makes it more difficult to get a sub prime mortgage, you should still pursue this avenue to see whether you can qualify.

Even with bad credit, sub prime and high-risk mortgage lenders do business with people who have credit ratings of 650 and below. The standard score for any traditional lender is 660 and above. Sometimes lenders will increase the required credit score to 670, to lower their risk of making the loan.

Sub prime and high-risk mortgage lenders are usually found online with sites detailed with various information like requirements, qualification criteria and other services. Again, you can find lots of credit card companies that issue credit cards for people with poor credit.