But you’re different. You’ve worked hard to improve your credit score by making sure you’ve paid all major credit cards on time every month without fail. But consider this: could a late payment to the local video store rental club unravel all you’ve achieved?

A record number of credit card companies have built “universal default” clauses into their agreements, which allow them to raise your interest rate if you’re late making a payment — even to someone else!

Is there such a danger lurking in the fine print of your credit card contract (blithly referred to as “the agreement” by the companies)? Is there a nasty surprise waiting inside your next monthly credit card statement?

Lately, news reports of more and more people becoming aware of the so-called “universal default” clause buried in the fine print in their credit card agreements; becoming aware not because they were curious about this heavy-handed new trend, but because they have been personally affected by the clause — a clause that sometimes spikes the monthly revolving interest rate up as high as 30%!

How could this happen, you say? Well, some credit card companies — apparently on a new search to implement new fees to increase corporate profits — have introduced this onerous high-interest penalty on their customers.

Is it fair? Not in the minds of those affected — and certainly not to those who have never even missed a payment due date with that particular company!

See, the universal default clause could affect you if you so much as get a late medical bill (which is a common occurance since hospitals in our part of the country are notorious for having outdated billing systems).

The trend is definitely on the rise. A recent survey detected nearly 4 out of 10 credit card issuers report that they apply the rule to their customers, even if those customers had no late payments on their own card! (How’s that for “customer service” ?!?!)

It could affect you if your credit score slips due to a late car payment, or a late utility bill, or a number of other reasons that you probably won’t know about until it’s too late and you’re faced with loan-shark-level interest rates on your total balance. It could involve a late phone bill or a forgotten $15-a-month book subscription service — easy to forget, yet hard to swallow when the higher credit card interest kicks in.

It’s a shame that these companies take advantage of the very people who are contributing to their record profits by basically playing hardball over trivial payments, especially when these payments do not affect those companies’ stream of regular payments in any way. They can profess that such behaviours present an unacceptable credit risk for their shareholders. But they should be ashamed of doing this to ordinary, hardworking middle class people who are struggling to make ends meet.

Three solutions come to mind:

(1) Get rid of debt now. Make the decision to read over the free information on this website and do whatever it takes to eliminate the balances on these credit cards, and once they are paid off, call the company and close the account.

(2) Be careful to make all your future payments on time, and aim to make them BEFORE they are actually due.

(3) Carefully, cautiously, painstakingly, read, read and re-read all future (even current) credit card agreements you are affected by. I’ve noticed a few of my card issuer’s have included new terms and agreements in recent credit card statements that specifically tell me they DO NOT follow this practice — but then go on to alert me to other penalties I could face if payments are ever late.

The solution for me — and hopefully for you — is to develop a satisfactory, working system to track all your debts, pay your bills on time, and take steps to reduce debt through the tips found on this website and at others. We’ve tried our best to link to good quality resources to help you in your quest.

There is a great new book we’ve come across, “Solve Your Money Troubles: Get Debt Collectors Off Your Back & Regain Financial Freedom” written by Attorney Robin Leonard and published by NoloPress, that offers a comprehensive solution to getting your finances in order. It’s a great resource.

Paul Richard, executive director of the San Diego-based nonprofit Institute of Consumer Financial Education was recently quoted as saying:

“Universal default complaints are definitely on the increase — at a disturbing rate. More than one-third of major credit card issuers now say they act on these clauses regularly.”

He added that many consumers were still unaware of the dangers because they either don’t read or don’t understand the credit card agreement. I, for one, would like to add an “Amen” to this last reason, as the language of these agreements seem like you’re signing away ALL of your rights!

Scott Bilker, author of “Talk Your Way Out Of Credit Card Debt” reports a growing number of credit card companies check your credit file at regular intervals, and if you’re late paying any other bills — not just theirs — they raise the low interest rates enjoyed at the beginning of your cozy credit relationship you started with them, and, in many cases, double or triple what you are charged to carry a balance!

Credit card firms have ways to review your credit report monthly, quarterly, even yearly. It is also true that some companies never do this (yet!). Experts note that customers who have made late payments on their accounts in the past can expect to get reviewed more often than those who always pay their bills on time.

The real worry growing is that this default clause can do lasting, unexpected damage to your FICO credit score in ways most people have never imagined. Sometimes it could happen at the worst possible time, like right when you are planning on buying a new car or a new home. Problem is, at the time negative marks appear on your credit report, the scores will drop, the damage is done, and only the passing of time and intensive effort on your part will be required to start the process of improving your credit history all over again.

More questions you need to ask yourself:

Do you carry a large credit balance? Transfer to a low fixed rate card that does not include the universal default clause buried in the fine print. If you are unsure, call the issuing company and ask.

Do you know what’s happening with your accounts? Review them carefully. Read over each bill when it arrives in the mailbox, check its due date, pay the bill RIGHT THEN, or mark on your calendar when to mail it (we recommend mailing it ONE WEEK BEFORE THE DUE DATE or else making the payment online THE DAY BEFORE IT IS DUE. For added safety, you can pay about 60cents at the U.S. Post Office to have your credit card check signed for. If you have 5 or less bills you pay this way every month, that would only add up to $36 for the year, and you’d have written proof as to when those payments were received if a dispute ever arose.

Do you know how to file a dispute with the companies you do business with? We are rapidly leaving behind the days when you can call up and ask for forgiveness for a late payment, it just doesn’t work well these days. But if you take action promptly to work out something with your lender or with your credit card issuer, then perhaps you have a chance to avoid these incredibly high interst rate surcharges. Don’t avoid the problem and wait to deal with it until after your account has been sent to a collection agency. By this time, your credit score is probably doomed to deflate.

Do you have lists of your credit cards, balances, limits, interest rate and payment due dates safely tucked away where you can quickly find them? Get your financial house in order and come up with a master bill paying list to help yourself track which payments are due when. Usually, this is pretty easy, since most payments fall due on the same day of each passing month. A cheap calendar ought to work in a pinch.

Is the timing of your payments creating a hardship? If you are paid twice monthly, and your payments all come due at once in the month, perhaps you need to get in contact with your credit card companies and ask them to have your due dates changed to help you make the payments on time. I’ve found that most firms appreciate such a proactive approach and will do what they can to accommodate you.

Do you pay your bills ON THE DAY THEY ARE DUE or do you allow proper time for mail delivery? Maybe you can give yourself a comfortable cushion by paying your monthly bills when they arrive in your mailbox instead of piling them up on your counter or in a drawer in your desk and paying them when they are due. We all get busy. It’s easy to forget a due date every now and then if the information isn’t right in front of you. Better to keep the reminders in plain sight than to hide them away. Even better: write out the check the very same day you receive the bill, put in in the payment envelope with receipt, and place these in a hard-to-miss place in your home (perhaps under a magnet on your refrigerator?) No, you don’t have to mail the check until it’s due and you have the funds in your checking account (Never pay a bill until the money is in your account!!!), but getting into the habit of writing your bills out ahead of the due date will help you from falling into the late-pay trap.

Do you pay bills automatically by electronic draft or through online bill pay options? If not, consider experimenting. I used to say I’d never do this, but for the past 2-3 years, I don’t think I’ve paid for a stamp to pay credit card payments. I’ve always paid my bills online. It’s easy, and you can tie your payment schedule to e-mail reminders.

When you apply for a new credit card, do you read the fine print? Yes, those new juicy zero-interest intro offers look good at first, but you might be stepping into a financial landmine if the terms don’t offer you some protection from things like the universal default clause we’ve discussed here today. Never let your guard down and forget the fact that you are entering into a legally binding agreement… one that could cost you dearly if you’re not careful.

Steve Johnson is publisher of http://www.FindHow2.com, which offers free advice on cleaning up your credit report to help improve your FICO credit score, as well as numerous free “how-to” articles on debt management, refinancing loans, and saving money.

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I am here to tell you that applying and qualifying for a home loan is not as difficult as climbing Mount Everest or running a marathon, but there are some basic things that all lenders look for in your application. You can be lacking in one or two of these areas, but you must be strong in most of them in order to obtain a home mortgage. Let’s explore the 7 things that lenders look for when determining if you are worthy of a loan.

Job Stability: Lenders want to see a 2 year employment history on your application. The best situation is if you have been with the same employer for two consecutive years or more. Frequent job changes or gaps in employment of more than a month must be explained and can jeopardize your chances of obtaining the loan.

Own a business? Business owners must also document a 2 year history of the business by providing a letter from their CPA stating that they have been in business for at least 2 years, or provide a business license showing the start date of the business, at least 2 years prior to application.

Don’t have the 2 year history? Don’t worry, if you are strong in the other 6 categories listed below, you can still obtain a mortgage. There are “No Doc” loans designed especially for you. With a No Doc loan, the lender does not verify your employment history, and you don’t have to disclose it. However, you will pay a higher interest rate for this mortgage.

Income: Going hand in hand with your job history is your income. Lenders will also go back two years in this category by collecting 2 years W-2’s and current pay stubs from you. If you are a business owner, the lender will take a two year average of your income based on the bottom line of your tax returns (after all write-offs). Same with commission income, you must have a two year history, and the lender will take an average over those two years.

As long as your monthly debt payments (auto loans, student loans, credit cards, and mortgages) are at least 41% or less of your gross income, you will qualify. If your ratio is higher than 41%, you may still qualify, but you must be strong in other areas.

Down Payment: The good news is that a down payment is no longer required to buy a home. The market has been inundated with 0% down mortgages in recent years. However, the terms of the loan (read: interest rate) will not be as good if you borrow 100%. Even putting 5% down will help you obtain a better rate. If you put 10% down, the terms will be better yet, and if you put the traditional 20% down, you will get preferential treatment and the best interest rates.

Reserves: This is a mortgage term which simply means money in the bank after closing. 1 month of reserves is one mortgage payment, taxes and insurance included. Depending on the type of mortgage you are obtaining, you will need 2-6 months of reserves after closing to qualify.

Credit History: You had to know we would get to this one. Credit history is a big deal to lenders and a big factor as to whether you qualify and how good the terms will be. The lender will look at your “fico” score, which is a computer generated number that helps determine your credit-worthiness. The formula for calculating the fico score is complex, but takes into account many factors such as pay history, collections, judgments, bankruptcies, and even residence and job stability.

Fico scores can range from 350- 850, but are rarely under 500 or above 800. Here is a general guide as to what each range of scores mean:

499 or lower: You cannot obtain a mortgage with a credit score this low. You must repair your credit before applying.

500-579: “Subprime” You will likely have to have some sort of down payment to obtain a mortgage. Your interest rate will be quite high, and credit repair is recommended.

580-619: Still in the subprime category, but with a score in this range, you can obtain 100% financing, and your terms will be better. You may also qualify for an FHA loan, a government program sponsored by HUD that helps people qualify for favorable mortgages with better terms than subprime lenders.

620-659: This is the credit score range between subprime and prime loans. Lenders call this category “A-.” If you are in this range, you will get rates slightly worse than “A” credit borrowers, but much better than subprime borrowers. You can obtain 100% financing, and you will have options.

660-680: This is the low end of “A” credit mortgages. You can qualify for the same mortgage as someone with perfect credit, but the rate will be slightly worse.

680-719: Your credit is slightly above the national average, and you can obtain the best terms on a mortgage. Credit in this range makes qualifying much easier.

720+: Scores in this range are considered the pinnacle of credit, and you will receive preferential treatment. With many lenders, your rate will be better just because of your perfect credit.

Characteristics of the Property: Depending on the type of property you are buying, the guidelines may be stricter, or the interest rates higher. For example, if you are buying a condo or a manufactured home, you will probably have to pay a higher interest rate. If you are buying a 4-plex or a condo in a high rise, you may have to come up with a down payment. Any property that has more than 4 units is considered commercial, and you must obtain a commercial mortgage.

Purpose of the Loan: Depending on the purpose of your loan, you will get different treatment as far as the requirements to qualify. For example, if you are refinancing your home, the loan-to-value ratio (percentage borrowed vs. appraised value) will be less if you are taking “cash out.” If you are obtaining a construction loan, generally a down payment is required and you must have at least decent credit. The type of mortgage you are looking for might also require higher credit scores or more reserves, such as an investment property loan.

Hopefully, this article will help you get your ducks in a row before you apply. If you are strong in most of these areas, you can probably obtain a mortgage. Apply with an experienced and knowledgeable mortgage consultant who can help you work toward qualifying even if you don’t qualify now. The best people in the mortgage business are in the business of helping people and are willing to work with you over the course of months or even years to guide you toward home ownership.

RJ Baxter has been a mortgage consultant for four years. RJ utilizes his teaching background by educating consumers and advocating ethical business practices in the mortgage industry. RJ has received several awards for excellence and loan volume and has consistently ranked in the top ten among over 400 loan consultants at PrimeLending. For more articles like this, or to read more about RJ or PrimeLending, please visit http://www.rjbaxter.com/signup.asp.

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Lenders are going bankrupt, Wall Street and the Secondary Market have stopped purchasing “high risk” loans (High LTV-Stated and No Doc, High LTV-Low FICO, and High LTV-NOO lending niches are considered “high risk”) and good loan programs for people with bad credit are being eliminated or revised. All this converging together is making it harder for those with bad credit to get a mortgage or get a mortgage with a good interest rate.

Find out what happened, who’s left and what your options are.

What Happened?

Seventy-Seven (That’s right—77) bad credit mortgage lenders have closed their doors for good since the beginning of the year—here are some of the notables:

- Southstar Funding (RIP 4-02-2007): Over 5.5 billion dollars in loans originated in 2005, employing over 700 employees, lending in more then 30 states and voted the “best company to work for” by Atlanta Business Chronicle in 2004.

- MLN (RIP 12-29-2006) One of the first to close their doors and one of the top 3 bad credit mortgage lenders in the country.

- Fremont (RIP 3-2-2007): One of the top ten bad credit mortgage lenders in the country.

Why Did This Happen?

A number of factors brought about the bad credit mortgage lender meltdown—issues like increasing interest rates, high national foreclosure rate, loan buybacks, defaults on warehouse line commitments and Wall Street & Secondary Market’s declining appetite for these types of “high risk loans”.

Who’s Left?

Not many…

Those that are still offering bad credit mortgages have realigned their positions with risk and the remaining bad credit mortgage loans being offered today are harder to qualify for then they were 6-7 months ago.

Here are few of the remaining bad credit mortgage lenders still offering bad credit mortgage loans (please note that some or all of the lenders may or may not have retail operations—loans can only be arranged through affiliated loan professionals):

- Bankers Express (www.bankersexpress.com)

- Eastern Savings Bank (www.easternsavingsbank.com)

- Flexpoint Funding (www.fpfloans.com)

What Can You Expect?

If you haven’t shopped for a mortgage in the last 6-7 months, be prepared to be shocked and awed—these are just some of the changes in the bad credit mortgage lending industry today:

- Expect to get a lower LTV (loan to value) allowance: Gone are the days that you have a lot of options if your FICO score is below 600 (unless you have a sizeable down payment).

- Expect tougher guidelines for first time home buyers: FTHBs have been identified as a high risk lending group—gone are the days that you have a lot of loan options if you are a first time home buyer.

- Expect to put down a bigger down payment: If the bank is going to reduce its LTV allowance—conversely, borrowers will be expected to bring larger down payments to the closing table.

- Expect to wait longer to qualify if you have a bad credit history: A lot of bad credit mortgage lenders are changing their guidelines on when/what/how they will lend to people that have recently gone through foreclosure, bankruptcy, repossessions & judgments/collections.

- Expect hard times if your FICO score is below 500: Unlike 6-7 months ago, the only programs available to sub-500 borrowers are hard money lenders.

What Type Of Loan Will I Get?

Assuming that you do qualify for the “typical” bad credit mortgage that is being offered today, this is what you can expect:

- A 1st mortgage with a high interest rate. Depending on various circumstances, your rates could be anywhere from 8-12%.

- A 2nd mortgage with even a higher interest rate. If you are trying to get a loan for anything above 80% (and don’t want to pay PMI to get a higher LTV loan), you will need to get a 2nd mortgage with interest rate in the double digits.

- An adjusting payment. Most bad credit mortgage loans offer payments that are fixed for the first 2 or 3 years only—once you have past this teaser time period, your mortgage payment changes (and most often for the worst—higher).

- Once you get the loan, you can’t get out of it. In order to make this loan programs more attractive, a lot of lenders attach a PPP (prepayment penalty) to the loan making it near impossible for a borrower to get out of it once they agree to it (unless they want to pay the 4-5 figure penalty to get out of the loan).

What’s The Best Bad Credit Mortgage Loan Available Today?

Despite the bleak overtone of this article, there are still a handful of good loans for people with bad credit—loans that allow for:

- Up to 97% financing- Lending decisions not based upon credit score (even people with no credit score can qualify for this type of bad credit loan)

- Up to 6% in seller concessions to be contributed to the buyer’s closing costs and prepaid expenses.

- A non-owner occupied co-borrower with a better credit score/history to assist you with qualification.

- Gift funds, gifts of equity and down payment assistance grants to be used in place of down payment.

- First time home buyers allowed.

- A loan with no prepayment agreement or penalty (so that you can refinance as soon as your FICO scores improve).

- A loan that offers a fixed interest rate for 30 years (no more changing payments or higher interest rates).

If you have a bad credit score and want a mortgage, it’s more important then ever to do your homework (and beware of the 2 and 3 year ARM bandits).

H. Scott Miller is a lending industry professional, Managing Director of Bad Credit Mortgage Makeover and is highly regarded and acknowledged as a credit restoration expert in the field of real estate finance. He is the author of “The Complete Guide To Quickly and Easily Improving Your Credit Scores”, written specifically to assist individuals in restoring their credit so as to allow them to pursue their financial dreams of homeownership and lower their total cost of borrowing in every credit situation. 

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If your score is below 600 for any reason, you need to take corrective action. Better to put off looking for homes for sale, until you can purchase one at a good rate. Otherwise, you will be paying thousands more than necessary for your homes for sale over the life of the mortgage. A score below 600 puts you at a disadvantage with homes for sale lenders; but with dedication and lots of effort on your part, you can improve your FICO score and get the better mortgage rate and terms for your homes for sale. This article gives you ways to improve your FICO score and your credit report.

Payment History

Your payment history accounts for 35 percent of your FICO score and has the biggest impact on purchasing homes for sale. It covers your timeliness of payments, bankruptcy, liens, wage garnishments, collections, delinquent accounts, and the severity of the delinquencies — all very important data to the homes for sale lender. Do the following to improve your payment history:

• Catch up any delinquent bills and make them current. Begin with the revolving credit accounts and then the smallest to the largest account balances. Then, stay current.

• Begin paying all bills on time.

• If you find yourself having financial problems, contact your creditors immediately — before you are late on payments. They can help you with temporary remedies that may not impact your credit rating. If you are truly in debt and do not know what to do, contact a reputable credit counselor, generally a nonprofit firm, to help you learn to manage your finances responsibly.

Even after you pay off collection accounts, they may impact your ability to purchase homes for sale. They will remain on your credit report for seven years.

Total Amount Owed This accounts for 30 percent of your FICO score, a big factor when buying homes for sale. It covers how much you owe and how many of your credit lines are being used. Improve this area by:

• Keeping your debt-to-credit ratio low. Otherwise, if you have a total credit availability of $20,000, for instance, and total owed of $10,000, then your ratio is 50 percent. High ratio percentages are negatives to homes for sale lenders. At the most, 75 percent is barely acceptable to the homes for sale lender; 35 to 25 percent is best. So, pay down your total debt to improve this ratio, lowering your credit card debt first.

• Pay off your debt. Do not just move it around. The debt-to-credit ratio makes it useless to move what you owe from one credit to another.

• Leave unused credit card accounts open, especially when they show a good credit history in the past. Close them and you do two things — (1) raise your debt-to-credit ratio by lowering your credit availability, and (2) it wipes out the history for the cancelled accounts, if no balance.

• Do not open new credit card accounts just to increase your credit availability level, especially if you do not plan to use them. Too much credit capacity is as high a risk to homes for sale lenders as a high ratio.

Length of Credit History

How long you have been establishing credit accounts for 15 percent of your FICO score, as well as how active your accounts have been. Do the following to improve this section before buying homes for sale:

• Do not open a lot of accounts too rapidly. It will lower your average account age, especially if you have established credit in only the past few years. It also makes you look risky to homes for sale lenders.

• If you have older accounts that you do not use, consider making small purchases and paying them off within six months to continue building a positive credit rating.

• Avoid offers for new cards. Too many credit cards make homes for sale lenders see you as a disaster just waiting to happen.

• Additionally, the longer you pay your bills on time, the more improvement you will see in this sector of the FICO score.

New Credit

New credit accounts for 10 percent of your FICO score. It covers how many new accounts you have opened and what types of credit lines they are, as well as how many recent inquiries have been made against your credit. These are inquiries initiated, because you attempted to secure credit (for example, you applied for a credit card — whether the application was rejected or accepted). Improve this segment by:

• Rate shopping for credit within a focused period of time of 14 days or less. When looking at homes for sale, many people “check out” loans over a long period of time, especially if they are not in a hurry to buy. It makes it look to homes for sale lenders as if you are constantly looking for more credit. Ensure the inquiries show up on your credit report within a short span of time, so that homes for sale lenders know you were shopping for a single loan.

• If you need to re-establish credit, open one or two accounts only. Then, manage them responsibly by keeping the purchases small, the account balance low, and make your payments on time. Also, pay at least a bit more than the minimum payment.

Type of Credit

Another segment that accounts for 10 percent is the type of credit accounts you have. This includes major credit cards, retail cards, mortgage, equity lines of credit, any installment loans, and so on. Improve your credit mix by:

• Having one or two credit cards. It is ironic that homes for sale lenders are leery of people who do not have credit cards.

• Installment loans (for example, a car loan) is better than revolving debt (such as, open-ended credit cards).

• Certain finance company debts (such as buying a large appliance from a retailer with in-store financing) can lower your FICO score.

• A good credit mix shows you can handle multiple credit lines responsibly and usually includes one to two credit cards, one department store card, and an installment loan. If you try to enhance your credit mix, remember to do so slowly over time; otherwise, it becomes a red flag for the homes for sale lender.

• Closing undesirable accounts does not drop them from your credit report. If you have a balance or have shown a late payment history, they remain and continue to be used as part of the FICO scoring.

Improving your FICO score before looking at homes for sale ensures that you will pay a lot less money over the life of the mortgage. It is worth the dedication and effort required.

John Harris is an expert researcher and writer on real estate topics such as economics, credit improvement tips, home selling advice and home buying preparations. For more information please visit Carlsbad California Real Estate

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In reality, most people don’t do enough research to get the right information before they decide to apply for a mortgage or refinance. And if you are in need of a bad credit mortgage loan then this article is even more important, because there are a lot of unscrupulous lenders out there that will gladly take advantage of your situation. Here are eight things you need to know for more skillful borrowing:

1. Be Prepared

The first thing you must know before applying for a bad credit mortgage loan or home refinance is how much you can afford to spend before you even begin your search. Carefully go over your credit history by requesting a copy of your credit report.

It is estimated that 79% of all credit reports contain errors, so take care of those first. Most small errors can be cleared up by sending a letter and proof of the error to the credit bureaus. However, major errors should probably be handled by a good credit attorney. We have a very good one on our website if you are interested in this service.

Your lender will base your loan on your FICO Score – a mathematical model created by the Experian credit bureau as a tool for lenders to use in evaluating the risk associated with lending you money. If you don’t understand how credit scores work and want more information you can visit MyFico.com for a free “credit education”.

Your FICO Score is compiled from a series of questions based on your credit report and your debt-to-income ratio. It will greatly expedite the loan application if you have your credit report and your debt-to-income ratio on hand before applying.

To figure out your debt-to-income ratio divide your monthly debts by your gross monthly income. For instance – if all your bills total $2,000 and you earn $3,000 monthly your debt-to-income ratio is 66%. Most lenders want your debts to be below 50% of your income.

2. Know What Can Affect Your Loan

Your credit history and debt-to-income-ratio both affect the your FICO Score. The higher your score the better interest rate you can expect. If you have good credit and your monthly income far surpasses your monthly debt obligations you most likely will get approved at a lower interest rate. If you have a low FICO score then you will need to work with a lender that specializes in bad credit mortgage loans. Your interest rate will be higher.

The other factor to consider is what you can afford as a down payment (if you are buying a new house) and/or how much equity you have in your existing home (if you are refinancing).

3. Shop Shop Shop

1-800BadCredit.com supplies you with a great list of the best mortgage companies on the Internet to compare loan products and rates. No matter where you go, shop around!

One of the biggest mistakes that most consumers make when shopping for a loan is to only contact one lender. Consider this – would you only go to one dealership if you were buying a new car? Mortgages, like car prices, are negotiable. The best way to shop for a bad credit mortgage loan or refinance (or even a good credit one) is to request comparable quotes from several brokers. By shopping your loan and negotiating the rate you will get you the best possible loan.

4. Know Which Loan Best Fits Your Needs

There are advantages and disadvantages to every loan – doubly so for bad credit mortgage loans. A 30 year fixed is always a good way to go for a mortgage loan, but a home equity line of credit (HELOC) or a second mortgage are both good options instead of a straight refinance. Make a point to find out what all your options are and choose the best loan for your needs.

5. Determine The Total Loan Costs

To get the best loan you need to know the annual percentage rate (APR). The lower interest rate may not be the best loan. Especially if you’re applying for a bad credit mortgage loan.

The lender usually charges an initial fee for processing your loan – this is called “points.” Don’t be confused by a low interest rate if the points are high. It could turn out that your total cost may be more than you thought.

When selecting a fixed-rate loan, the best way to determine which terms are better is to add up the dollars you will pay for interest and fees, including points, over the life expectancy of the loan.

Are points – good or bad? It really depends on if you are looking at the short term or the long term. The longer you plan to stay in your home, the more points you can afford to pay to “buy down” the interest rate. Points are deductible, and the lower interest will more than pay for the points over time. These days it is rare for someone to stay in a home 30 years which is the length of most mortgages.

6. Know The Ups And Downs of Lock-In Rates

A “lock-in” is a lender’s written promise to hold a set rate for a specified time period until the loan is completely processed. The upside is that this locks in a lower rate when rates are changing daily. The downside is that lock-ins often cost extra and if rates go down you are locked into the higher rate. This could be a problem because rates are shifting quite a bit at this time.

Dewey Kearney is the owner of 1-800BadCredit.com a site dedicated to providing you with the best information on all things credit. We have been down that road ourselves and know the challenges people with bad credit face and we are committed to helping you get past that point in life.

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2. Quick and Easy Ways To Improve Your FICO Score
3. 18 Ways to Reduce Your Mortgage Loan

A credit score or rating is something that every adult with a credit report has. This is commonly known as a FICO score, which is a credit score developed by Fair Isaac & Co. Credit scoring. This is a method of determining the likelihood that credit users will pay their bills. Lenders analyze your credit scores to determine whether or not to approve a home mortgage, a car purchase and nearly all other types of loans. Your credit score can have a huge impact upon your future and those with a good credit rating can look forward to a far brighter financial future than those with poor credit scores. So, how exactly is your credit score determined?

Before lending you money, creditors want to determine how much of a risk you are—in other words, how likely you are to repay the money they loan you. Credit scores help them do that, and the higher your score, the less risk they feel you’ll be. The rewards of raising your score speak directly to your wallet: You’ll qualify for more loans and be offered better interest rates. Your credit report contains a range of information relating to your financial situation, including the money you owe or have borrowed, your repayment habits, any missed or late payments, court judgments and bankruptcies, any loan applications you have made, and any loan refusals. Your credit rating can be affected adversely in many ways, and this can include missing or late payments, as well as being turned down for credit by lenders and merchants.

Credit Scoring Analyzes Five Areas of Your Credit Report

1- Your Payment History
The factor that has the biggest impact on your score is whether you have paid past credit accounts on time.

2- Amounts You Owe
Having credit accounts and owing money doesn’t mean you are a high-risk borrower. But owing a lot of money on numerous accounts can suggest that you are overextended and more likely to make some payments late or not at all.

3- Length of Your Credit History
In general, a longer credit history will increase your FICO score. Lenders want to see that you can responsibly manage your available credit over time.

4- Types of Credit Used
People today tend to have more credit and to shop for credit more frequently. But opening several credit accounts in a short period of time can represent greater risk-especially for people with short credit histories.

5- Your New Credit- Types of Credit in Use Currently
Your FICO score will reflect your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. The credit mix usually won’t be a key factor in determining your score-but it will be more important if your credit report doesn’t have much other information on which to base a score.

You can improve your credit scores by taking a close look at your credit reports and charting a plan of action to improve them. As follows are a few tips to increase your credit score

Correct blatant mistakes. Your credit score is only as good as what shows up in your credit report. Review your reports from all three credit bureaus for accuracy once a year as well as several months before applying for a loan.

Pay your bills on time. This is always a good practice, and it’s especially critical that you make prompt payments close to the time you need a loan. That’s because a late or missed payment in the last few months is likely to lower your score much more than an isolated late payment five years ago.

Reduce your credit card balances. A heavily weighted factor in your FICO score is how much money you owe on your credit cards relative to your total credit limit. Generally, it’s good to keep your balances at or below 25 percent of your credit card limit, said Jeanne Kelly, founder of The Kelly Group in Brookfield, Conn., which helps clients improve their credit scores.

Pay off debt rather than moving it around. Since the ratio of your credit card balance to your credit limit is key, closing out an account and transferring the balance simply means you increase that ratio, which is likely to lower your score.

Don’t close unused credit card accounts near loan time. If you have several credit card accounts but are only using a few of them, you’ll only raise your balance-to-limit ratio if you close the unused ones. You also shouldn’t open new accounts when applying for a loan if possible.

So where do you fit in? It all depends on the loan program. Conventional loans offer the lowest rates for residential properties, but you will pay almost 1% more for mortgage insurance if you borrow more than 80% of the property value. This is to protect the lender from the risk of a low down payment.

Sub-prime loans are available for people whose credit profile won’t qualify for conventional loans, or who have special needs with regard to income qualifying, or debt ratio, or similar issues. Sub-prime loans typically run about 2% higher to 8% higher than conventional loans, depending on the credit issues in your file, and the amount you are looking to borrow. They typically run about 2 to 6 points higher in loan origination fees as well.

Hard money loans are typically available for severely impaired credit situations, or homes where the property needs rehabbing. This is the one area in real estate lending where lenders don’t care too much if they get the property back. They usually charge a stiff fee to grant the loan (10 to 15 points), the rates typically run 16% to 18% interest only for 2 to 5 years, so these lenders make sure they have a lot of protection from a default situation.

When it comes to credit score the one thing to remember is the better your score the brighter your financial future is likely to be, so it is important to keep your credit score up as high as possible.

Laura is an experienced copywriter who produces great articles about mortgage related topics for homeowners. You can read more mortgage related loan articles online at Smart Mortgage Refinancing. If you want more information about home equity or debt consolidation loans, please check out Home Equity Loans Direct. If you want to learn more about your credit report, please visit http://www.experian.com/

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If you have poor credit – you are not alone. It is estimated that approximately 30 million Americans struggle with bad credit from having excessive credit card debt and not paying their bills on time. Unfortunately, rising medical costs, job layoffs, ridiculous gas prices and escalating home prices are exacerbating the rate at which Americans are falling into the bad credit pit.

Without a doubt, no other process renders you more ashamed and more aware of your bad credit score than the act of purchasing a home. Buying a house with good credit is horrendous enough, for first time homebuyers. For people with bad credit, it is an act of congress but it need not be. Here are four easy ways to buy a house with bad credit.

Keep it in the family. Get a relative who has good credit to purchase the house on your behalf. A family member with a solid credit history, will get a good interest rate thereby making your monthly mortgage payments more affordable. You will also get some exposure to the home buying process without being overwhelmed.After your relative closes on the house, you must take over the mortgage payments, insurance and taxes. This will ensure that you get the tax benefits of being a home owner right away. Arrange for your relative to sign a “Grant Deed,” to add your name to the title of the property. This makes you a co-owner of the house.

At this point, you should focus on rebuilding your credit score to between the 675 to 715 range – the higher, the better but you can make this your initial goal. To improve your score, you must live by these three rules:

Any of these four options will lead you down the path of home ownership. Buying a home with bad credit is an attainable goal.

Access the list of lenders, who specialize in bad credit home loans and reviews on each lender, at the information-rich website http://www.poorcreditgenie.com.

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Well here are a few answers:
1. You will have to be creative in your offer to the seller.
2. You need seller’s who has a need to sell: Relocating, etc
3. You need sellers who are open minded to listening to another way of getting there property sold.

So why no one every told me that there was a different way? Well because a lot of people don’t know how to think differently. I was talking with a group the other day and it seem like they where saying that if a new pair of jeans come out and it becomes stylish then we all tend to buy them based on the crowd. It’s the same way as buying a home. We have become so use to hearing lenders say no until after the third no we usually give up. What I want you to do is snap out of it! Stop allowing the no’s to keep you from moving forward in trying to purchase a home. I’ve learned that you have to get pass the no’s to get to a YES….. Just like right now you are ready to buy your next home and your lender has turned you down….. Here is the question to ask your lender:

1.” If I don’t qualify for 100% financing what amount do I qualify for? Do you qualify for a 95% loan or do you qualify for 90% loan or do you qualify for a 85%….. Find out what you can qualify for….

2. If you find out that your credit is below the minimum credit score then what other strategies are there?

(A.) You can ask that seller can you rent there home for at least 12 months to 2 years and have an option to buy the home.
(Note: Within this period you need to make sure that you are re-establishing credit and doing debt settlement with some creditors that want come off of your credit report. )

(B.) You can ask the seller will they owner finance there home to you with a little money down.. This amount can be 3% or more down…. What does this do for you? It helps you to qualify because you are not dealing with conventional financing guidelines.

(C.) You can check out FHA guidelines to see if you qualify for FHA financing.

Did you know that

FHA has come out with new guidelines? Look below to see some of the following things.

No minimum FICO score- FHA allows “common-sense” decisions.

Maximum loan amount for Dallas, Kaufman, Collin, Denton, Rockwall and Hunt Counties is $200,160 (Sales price of 204,760 with the 2.25 down payment)

Minimum Down Payment is 2.250%, but can roll in all cost with $0 out of pocket.

Buyer must make a 3% investment unless down payment is paid as a Grant/Charity (DAP) contribution.

Seller can contribute up to 6% of the Sales Price without using a Charity (DAP) contribution.

No Termite Inspection Required.

No Non-Allowables required for the seller.

Buyer can currently be in a Chapter 13 Bankruptcy.

It is an assumable loan (important when rates go to 8% and they are at 6%).

Buyer can have Federal Tax Liens and not have to pay them off!

(D.) Did you know that if you serviced in the USA army, Airforce, Marines or Etc you may qualify for a VA loan… Just look below at some of the guidelines:

NO Minimum FICO score is required*
There is NO down payment required!
Seller can pay any/all of reasonable buyer’s closing cost!
Buyer CAN currently be in chapter 13 BANKRUPTCY*
Sales Price can go up to $417,000*
Can have unpaid collections
Can go as low as an 4.20 Fixed Rate if used in conjunction with a Texas Veterans Land Board program.*
*Some limitations apply
(Note: Above information on FHA and VA loans where provided by one of my loan officers: Linda Davidson. If you would like to receive her information feel free to contact me….)

The above information lets you know that yes you still can buy a home. You might have a things to do list. But, don’t you think it would be worth giving it a try? So don’t give up. Keep your goals before you and like the old saying: “If first you don’t succeed, then try, try again.” Don’t give up on the dream of home ownership. You can have a home too!

Your Next Action Plan:
1. Find a Realtor and Lender that understands FHA and VA guidelines. Also find out what you can qualify for.
2. Get your credit report and see what things need to be settled and what things can be taken off.
3. Find sellers who will agree to terms of allowing you to rent and then give you an option to buy.
4. Talk with Sellers and see if they will Owner Finance there home.

Learn How To Buy And Sell Real Estate!
The Expert has over 6 years of experience in customer service. So he knows and understands that customer are valuable. He understands how to treat the customers and how to focus on there needs and wants. He understands that customers are looking for quality services. The Expert has over 6 years experience in dealing with Residential Real Estate and has been a Real Estate investor as a range of knowledge on creative financing.

Feel Free to stop by at: http://www.sellorbuyhomefast.com

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Some lenders may impose limits on how much of your down payment can come from borrowing from other sources. Make sure to get an estimate of your real estate financing closing costs from the lender you’ve chosen; by law, the lender is required to provide his statement to you within three days of receiving your loan application. Most of all you’ll need to determine what price range you can afford to buy in.

Loan programs for down payments of twenty percent or less require you to purchase Private Mortgage Insurance (PMI). When financing real estate it’s important to know that a low FICO credit score does not mean you won’t qualify for a home loan or home mortgage. 30-year fixed-rate mortgages offer consistent monthly payments for all of the 30 years you have the mortgage; if the market is good, you can benefit from locking in a lower rate for the full term of the loan.

If you’re on a fixed income, an adjustable rate mortgage, especially a short-term ARM, may not be always your best choice. People usually are not aware that they may be able to customize their loans; just ask the mortgage broker or lender; although lenders advertise 15-year loans and 30-year fixed rate mortgages, applicants can ask for 20 years, 25 years or any other number of years; this may allow borrowers to build up equity faster but keep monthly payments affordable. Your income and your debts will typically play the biggest roles in determining the house price range you can afford.

Insiders know that the advertised mortgage rates you find are not always what you’ll get from the lender; it could be market fluctuations, economic news, any other of a dozen reasons, but interest rates can change throughout the day. 20-year fixed-rate mortgages allow you to make a consistent higher monthly payment throughout all of the 20 years you have the mortgage; the shorter term means you pay the loan off quicker and therefore pay less interest and build equity faster than with a 30-year loan. If you’re buying a second home or second property, you’ll need to identify the sources of your down payment, since you’ll not be selling your current house and using the proceeds, and you’ll need to expect a larger monthly payments for housing or other expenses too.

If you’re a first-time home-buyer it’s possible that you may qualify for a lower down payment or lower interest rate; check with mortgage brokers, online mortgage companies, your county housing department or your employer to see if they know of any programs available. There are plenty of good options that are ideal for those who have a few bad credit marks on their credit report. A range of mortgage options are available; some loans require little money down.

The FICO credit score is just one of many factors that are considered in loan or mortgage applications; although it’s taken into account there are no minimum scores expected. Finding the best loan program for your needs depends on a number of factors, including: how long you’ll stay in the home, how much money you’ll put down and how you’ll finance the closing costs.

Make sure to take your time, study all the resources available online and offline and get lots of advice from several mortgage and real estate brokers and professionals before you do any real estate financing or investing. Ask other homeowners how they’re doing and what real estate and mortgage pitfalls to avoid. And whatever you do don’t get yourself into a situation where you can’t make the mortgage payments; think far, far ahead.

For more information on bad credit real estate financing and finding the best home or commercial loan or mortgage go to http://www.Real-Estate-Financing-Tips.com a real estate broker’s website specializing in real estate financing tips, help, quotes and resources including refinancing and creative financing

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