The Best Way To Approach Mortgage Shopping

Buying a home is one of the most liberating experiences that a person can go through. Financially speaking, it is the biggest investment that most people will make in their lifetime. That said, if you incorrectly approach the subject of applying for a mortgage, you could end up putting yourself through a great deal of stress.

 

When shopping for a home loan, you should avoid shopping the way that you would for a box of diapers. The most for lowest cost is the wrong way to think about the subject, and the “best deal” isn’t always the best choice. Low interest rates and high principles are a good thing, but they aren’t everything.

 

Instead of looking for the biggest loan you can get your hands on, start by finding out how much you can reasonably spend on a mortgage each month. This is best determined through personal experience rather than budgeting. Start saving as much money as you can each month in order to find out what you can stand to save while still having enough money leftover for fun.

 

This serves two purposes. Not only will you discover how much you will be able to spend each month, you will also start saving up for the down payment on your home.

 

Only after you have a reasonable understanding of how much you can spend each month should you start speaking with lenders. From this point forward you can talk to them about what size loan you can get approved for based on the size of your monthly mortgage payments.

 

Rather than seeking approval for a loan at this point, the goal is simply to find out what size loan you are capable of qualifying for. You can use this information to determine how much to save up for your down payment. While 95% mortgages are tempting because the wait is much shorter, this isn’t always the best choice. In fact, in the long run it is actually quite a bit more expensive.

 

Most financial experts recommend saving up for a down payment of about 20% the value of the home. This way you can typically avoid the extra expense of lender’s insurance, and you can live in a higher quality home for the same monthly mortgage payment. The total amount of interest that you pay will be lower because the period of the mortgage is shorter and the interest rates are typically lower.

 

Everybody’s situation is different, but this strategy allows you to gauge your ability to pay for a mortgage, and ensures that you are fully prepared by the time you start looking at homes.

Simple Ways to Pay Off Debt

Life Without Debt

If you’re like most I’m sure the bills are piling up and the collection calls aren’t slowing down. Everywhere we look, every media we plug into – the news, TV, radio, magazine stands – they’re all talking about the debt crisis in not just America, but around the Globe, at some point or another. While these media streams do a great job at scaring us about our debt one thing I’ve noticed is that many of them don’t offer a simple solution to paying off debt.

I’m really not sure what caused you to go into debt, all I know is just a few years after I got out of high school, by the time I was 22, I had already accumulated close to $25,000 in debt between a car payment, student loans and credit cards. Just 18 months after losing our home to foreclosure, starting a GBG Business Opportunity and plugging into professional equipping and training, I have been able to pay down close to $17,000 of debt.

While increasing my skill at learning how to manage money and pay off my debt I learned one small principle that you can begin using today called “trimming the fat.” It basically sounds like what it reads – when you trim fat you take off the excess, un-needed, un-wanted (by most) part of the meat. And you can apply the same rule to your every day spending. Simply start looking at what and where you’re spending your money and ask yourself if it’s something you really need. I don’t know about you, but for me, one of the first places I had to start doing this was in the grocery store. I had to resolve to a) not go to the grocery store hungry, b) plan meals ahead and c) buy less.

It just so happens that I found a company to help me get out of debt that was a christian business opportunity and that may or may not be something that interests you. You don’t need to increase your income to begin paying off your debt. I started while my income was less than $20,000 a year. Either way, if you begin applying something as simple as “trimming the fat” you can start using the money you save (or don’t spend) to begin finding ways to pay down your debt today. Just try it each day and see where your finances are at a year from now.

10 Myths and Facts about Credit Repair You Should Know

Life Without Debt

Nothing hits quite like the sucker punch of receiving a phone call from a collection agency. Not only does that call mean you owe money, it means you’re late at repaying that loan. Late repayment doesn’t take too long to catch up with you in the form of a bad credit score.

You may be wondering what you can do to get back on track and bring that credit score back up. Here are ten myths and facts about credit repair that you should know.

Myth #1: Consolidating your loans will improve your credit rating.

Fact: . Consolidation loans tout lower interest and lower payments, luring consumers with their false promises. The plain truth is that consolidating is simply a fancy term used to describe the act of “borrowing from Peter to pay Paul.” Your debts simply move from their various current locations to one central location.

While consolidating may offer the quick fix of reducing your monthly payments, you’ll be left with a couple long-term consequences. First, to be approved for a consolidation loan, a credit check must be run, which will have an effect on your credit score. Second, the amortization period on a consolidation loan is often nearly that of a home mortgage. By the time you’ve paid those debts off, you may have paid double what you owed.

Myth #2: Once you finally get your credit card paid off, you should close the account.

Fact: If your credit report shows a revolving credit account that was closed, the assumption is that you were unable to handle the responsibility. Frequently, account closure will be listed on your credit report with no accompanying information – not even the word “paid.”

Your credit is built by having credit available to you that is not maxed out and is being paid down regularly and on time. Your credit is hurt by late payments and defaulting, but also by having maxed out accounts and/or account closures.

Myth #3: If your credit is terrible, it’s better to declare bankruptcy and start fresh.

Fact: Bankruptcy is NOT a fresh start! Rather, filing for bankruptcy marks the beginning of years of financial struggles. A bankruptcy judgement will stay on your credit report and on the National Personal Insolvency Index indefinitely.

Many people file for bankruptcy with the assumption that all debts will be left unrecovered, meaning that they are freed from the burden of payments. There are exceptions to every rule, though, and bankruptcy has a few. For example, back payments on child maintenance, government fines, taxes, and the like are not covered through bankruptcy.

Don’t forget, any joint credit holders or guarantors will be help responsible for the full amount of the debt if you are bankrupt.

Myth #4: If there’s something bad on your credit report, you’re stuck with it forever.

Fact: It IS possible to have your credit report changed. Not only can you request that errors are corrected, but you can request that verified bad reports are removed. First, call the credit reporting agency (or search their website) to find out their requirements. Often, a well-written letter is all you need to start out on the road to better credit.

Myth #5: Paying off your past-due accounts will fix your credit score.

Fact: Past-due payments are reported to your credit bureau, and they stay there. Getting caught up on payments will assure you of good reports in the future, but it will not cause your past bad reports to be deleted.

Myth #6: The concept of “credit repair” is a myth; you just have to wait it out.

Fact: It is impossible to simply wait for bad credit to go away. You’ve likely heard that magic number – seven years – and think that after a few bad credit reports, all that’s left to do is nothing for seven years in order to receive a good report.

The thing is, information does not always magically disappear with the passage of time. For various reasons, certain accounts may remain on your credit report indefinitely. The only way to change your credit score is to work at repairing you credit.

Myth #7: You can’t possibly repair your credit without the help of a professional.

Fact: Of course you can! Like any DIY (do-it-yourself) project, the key is research. You can re-tile your bathroom, saving yourself hundreds of dollars on labour, but you first have to learn as much as you can about the art of tiling. The same is true of credit repair. If you become a student of the art of credit repair, you can learn how to DIY.

Myth #8: Credit repair agencies are all scams.

Fact: If you need professional help to repair your credit, there are some highly knowledgeable, skilled, and reputable agencies that can help you. There are also a number of scam artists out to make a living by playing on peoples’ vulnerabilities. Avoid promises of quick fixes and help that sounds “too good to be true.”

Myth #9: If you owe money, the collection agency has the right to call you anytime they want.

Fact: While you are undergoing the gruelling process of repaying creditors and repairing your credit, you have the right to ask collection agencies to “cease and desist.” You typically need to make your request in writing, and it’s best to demonstrate that you have a payment plan in place. But ultimately, no one has the right to harass you…Even if you do owe them money.

Myth #10: I can hire someone to erase my credit record altogether.

Fact: While there are probably people out there who do this type of work for a living, they are criminals. If you hire them, that makes you a criminal, too. Better to have bad credit and be free than a sparkling clean credit report and a dirty rap sheet.

There’s a lot of information floating around about credit, credit scores, and repairing your credit. This list will help you weed out the facts from the fiction and get you on the right track to restoring your good credit.

Cathy is part of the team that manages Credit Card Finder, a complimentary credit card comparison service and a personal finance blog based in Sydney, Australia. Before she joined CCF, she was a staff nurse at Clark Airbase Hospital and conducted lectures on First Aid, Bio-terrorism and Disaster Management.