Re: Re: getting a loan with no credit...
 

How do I get a secured credit card?

I would contact a local bank or credit union to see if they offer them. Most Do, although if you are unable to find one that offers one, there are many that you can find online. Basically, what happens is this:

You take $X and put it into an account at that institution, and they freeze the funds. Basically, that means that you can't withdraw them as long as that credit card is open. You will, however, earn interest on it. In return, they give ou a credit card for $X - usually regardless of credit, as they don't have anything to lose. If you neglect to make your payments, they simply can take it out of the frozen funds at the institution.

Secured cards, however, generally report to the Credit Reporting Agencies as typical credit cards, they are just easier to qualify for.

Once you have a semi-established history with that secured credit card (usually six months or longer) you can probably re-apply for that some card and get your funds returned to you. If you are comfortable with them just earning interest, you can obviously keep the credit card if you like.

Forgive me for not reading this whole thread to see if this has been asked.

Do you have much experience with commercial credit? I'm looking for a business to buy for my wife to run. A bar or convenience store or somesuch. I have another thread now in this forum about it.

We are both in our late 40's and have pretty good credit and no debt other than our mortgage and one car payment. I'm sending her to our bank tomorrow to start a dialog with the loan people and if it's possible I'd really like her to do this whole thing herself - for it to be her business.

Any thoughts on this?

Oh man...do I need your advice!
Why do the 3 different credit bureau's have different scores? This is fustrating as hell. I know that most lenders use Transunion, but more and more are using the others. I paid a service to look at my scores and found tons of errors!!!!. I am going through the dispute process now. My biggest complaint are the companies that look at my credit without my permission. My Transunion score is about 70 points lower than the others.
Is there anything I can do to speed up the dispute process? It is going on 3 months here.
Thanks
Dawson70

I have dealt in some small commercial loans, but not a ton, so take this with a grain of salt.

Generally speaking, a tavern or a convienence store are the two most difficult types of small businesses to get financing for. Usually, unless you have a significant down payment (read: a minimum of 20%, usually 30%) it is unlikely you will find a loan for you without very creative financing.

What do you mean by "do this whole thing for herself?" Are you trying to finance this with only her on the loan? Or simply trying to have this business "be her baby"...

How are you guys sitting financially right now? Do you have a significant amount of cash left over each month?

Well, to answer your first question, usually the scores are a bit different because of varying degrees of accuracy and detail, as well as different scoring mechanisms.

I see that you are in Central WI, so it isn't surprising that people use TransUnion the most. The Credit Reporting agencies are based (and most accurate) in different areas. TransUnion is most accurate in the Midwest.

Although many companies do glance at your credit without your permission, it doesn't hurt your score. Only companies that you allow to look will damage it...

As far as disputing goes, it does take forever, but I believe there is a required period of time that they need to take action in or take it off your bureau. There are companies out there that will charge you to dispute them for you, and usually they'll get it done much more quickly. It really depends on if you need it done quickly or just want it done quickly...

If you need any more clarification, please ask :D

We are okay financially - I think we scored around 800 last year when we refinanced our house and again a few months ago when we bought the car. I make good money, more than enough for us to live on. As for the down payment, I figured we'd probably take a 2nd on the house. As for money left over each month, I max my 401(k) and we probably throw $500 a month in savings. Of course about once a year we buy something that depletes that so it's not like we have huge buckets of money in the bank. If we really tried I think we could save $1000 a month.

This convenience store we're looking at has a $149,000 asking price. The agent says it nets about $65,000/year for the current owner. I am hoping that means bottom line profit after everything but of course I haven't seen their books or tax returns yet. Anyway, 20% would be $30K and I believe we could swing that for a good bet.

As for this being 'her baby' I mean I want it to be her store. I will do whatever needed financially but this is to be her job, her business, her baby. I'll keep my job. I like that concept because she wants to contribute to the household and if she could really pull in $65K a year after taxes and all that effectively doubles our income (as opposed to her working for someone else for peanuts). That would greatly help with my true goal of not having to work for wages until the day I die.

I also thought there might be some loan guarantees available to her as a female owned business. I've crawled the SBA website but there's an overwhelming amount of stuff there. I guess I need to spend a chunk of this weekend and make a business plan. Sounds like I'll need a convincing one to take to the bank. Also, I'm a veteran so I should probably check the VA to see if they can help.

Thanks for the advice and feel free to throw out any pearls of wisdom you care to share.

I just caved in and started a 4 year lease on a 2005 volvo s40 base model for $1,000 down, and $330 a month, 12,000 miles a year.

Four years seems like an uncommonly long time, but the contract states there are no penalties when I close the lease, and I get an allowance of $1,000 to cover any dents and scratches it has when I turn it in.

I know nothing about how most lease deals go, and was wondering if that seems like a good deal.

It's a lease, so that should answer your question. It's like renting. Not a good deal.

Well, it sounds like you are in a pretty decent position to start this then. An 800 credit score, by the way, isn't okay, it is excellent. Be sure, however, that you are able to support this business without the income from it, as there certainly may be tough times ahead. I would imagine that it would be relatively safe to say that it pays for it's own operating expenses, but make sure that the loan payment would be manageable with just your income.

The only help I can offer with actually getting the loan, is to make sure that you have everything in order. If you are denied due to "policy violations, Loan to Value Ratios, ect" from a larger institution, try a smaller one. Smaller institutions generally don't have a large amount of commercial loans, so they are more likely to look at them on a case-by-case basis, instead of using blanket policies to govern their decision.

Another helpful hint on getting the loan: Sheer quantites of information can intimidate smaller institutions into giving in, in some cases. Come up with as much information as you can, regarding the books, statistics of the area, development, ect that support the business. A vast quantity of information will show that you have the dedication to make it work, as well as the information itself will help you argue your side.

Pearl of Wisdom- Do not let emotions into this at all. Having your wife run a business and all might be a goal, but make sure that you examine this business thoughoughly and logically. If there is a descrepency in the books, take what the owner says with a 10 pound bag of salt, remember, (s)he is trying to sell you this business. Come to your own logical conclusion, and although this may seem like the "perfect" business, don't become emotionally attached. More opportunities will present themselves, and it is better to wait for the right one that jump into something that will turn into a nightmare.

Also, it is not uncommon for small commercial loans to go sour rather late in the game. This varies from institution to institution, of course, but there will by times that a piece of information will arise that will bring the loan process to a screeching halt. If you do stumble upon some additional info, make sure to let the bank know. It very well may destroy the chances of the loan, but they have statistics from thousands of others just like you (via credit bureaus) and if it didn't turn out of a large percentage of them, it very well may come and bite you in your nether region as well.

Other than that, good luck, and let us know how it goes.

If you have any more questions, post 'em :D

Well, with leasing, it basically is up to you whether or not it is a good deal. If the volvo is worth $330 a month with the restrictions to you, it was a fine deal. My only advice with leasing (and I am not all too knowledgeable about it, mind you) is do not, do not, do not go over the mileage allowed. I had a friend of mine that drove it too much and it would quite literally sit in his garage 3-4 months a year, instead of risking paying the obsene $0.10 per mile or whatever it was over. He had leased it, and not too long after got a much higher paying job but needed to commute. If it isn't likely that your circumstances are going to change in the next 4 years, it shouldn't be much of an issue, but should they, that car may be a thorn in your side.

However, I am not particularily fond of leasing myself, unless there are extenuating circumstances. I'll give you an example of why. We'll use a 2000 Volvo S40 (base) for an example, as it should reflect the approximate depreciation of your 2005.

MSRP of 2000 Volvo S40 $22,900.00

$1000.00 Down leaves a loan balance of 21,900.00
Loan payments on a 6 year (72 month Loan) at 4% interest - $342.63/month

After Four Years of Payments (same as your lease) the principle balance on your loan is $7890.09, providing you paid on the date that it was due, and never a cent more than you needed to. The retail value (taken from www.kbb.com) is approximately $11,720.00. If you sell it at this point, you walk away with $3829.91. Had it been on a shorter term (read: higher payment) you would have more equity. And all this with no mileage restrictions.

Four years from now, you'll likely have the option to buy out something for a higher than market value when you have made payments on it for the last four years.

___
Note:

Keep in mind, you may actually come out ahead on the deal, if they difference of the lease payment vs the loan payment is greater than the equity you have in your car at the time the lease ends. I was unable to find a "typical" lease payment for the 2000 volvo, so I am unable to give a truly accurate synopsis of which, in this case, would be "better"

Personally, I never buy brand spankin' new cars because I'd prefer someone else takes the hit on depreciation than I. I drive newer cars, (currently a 2003) but never brand new. Basically, I am probably a bit biased that way. I would prefer to have something to hold onto after I have been shoveling out hundreds of dollars a month for years and years, but some people would prefer the simplicity of leasing, or the nicer, more attractive cars than they can afford with a loan buying it outright.

Hope that helps a bit, I didn't try to be too confusing :D

Thanks for your research into this, I really appreciate it and I want everyone to know I signed the lease today, and the car rocks :)

After looking at the fine print and whatnot, I think it turned out to be a good deal since Volvo covers more in their leases than most other car companies. The residuals on this car will be 10k which is about what I would owe after paying the same amount to a loan I think.....

Anyways I was a little apprehensive before signing the papers since I've heard so many nightmare stories about evil lease contracts that really screw you at the end, but everything here seemed okay to my limited financial reasoning :) thanks.

When looking at car purchase/lease finance papers, the interest rate on the leases was a good 2-3% higher than on the purchases. Ik.

Congrats on your purchase, I hope you enjoy it :D

Indeed, the value of a lease is determined strictly by the person signing it. There are a million arguements for and against them, but it all comes down to whether or not you find the use of the vehicle with the terms agreed upon a good deal for the monthly fee. As you are not gaining equity in the car, if you find that a fair price to "rent" the vehicle for, go for it.

HELP! Wife and I are looking at getting a credit line up to 100% of home value. Wife recently had surgery and has been unable to work, so we have maxed out our credit. FICO score is about 630, I have been getting all kinds of different offers and not sure what to do. Home is worth at least $290k and existing mortgage balance is $262k. We have about 20k in revolving debt and I was really just looking to consolidat that. Some companies have offered to refinance the entire loan, which is fixed at 5.5%. I know the interest rate will go up if I do this, but these companies are also proposing to get rid of mortgage insurance (right now we pay $150 a month for this). The idea would be to improve credit score and do another refinance in a year or so. Have been quoted a 2/28 loan (fixed for 2 years and adjustable thereafter) with interest rate of 6.4%. This company claims it can value my house at over $300k but I know that is high. The would loan 302k, which would pay off the first loan, all credit cards and even give us about $5k cash out to pay some of our legal bills. The loan discount/origination fee is VERy high at 3.4% (over $10,000!!). I definitely have reservations of this loan for both the overstated value of our home's value and the high loan fees. I know I am going to pay a little bit more due to lower FICO score. I feel more comfortable just doing a second. What do you think? Thanks for your help.

Do not do that loan. If you take out a loan higher than your home is valued at, you'll have a very tough time selling it in an emergency.

630 for a Credit score is not too bad, so $10k+ in closing costs is outrageous. If your score were 500-580 I could understand such a large fee, but I can't even imagine what would cost that much for a 630 score.

I would check into getting a second, possibly a HELOC (home equity line of credit) Most HELOCs have variable interest rates, but offer an interest only payment just in case you guys have a difficult month.

If you have any more questions, please ask :D

Thanks No Soup!

No Problem, it's what I'm here for :D

I got a question if you don't mind. I am a college student here in California. My projected cost of living in my college town is in the neighbor hood of $14K per year. I am thinking about getting a student loan to pay for my remaining 3 years. How does the interest work because I heard interest does not begin untill I graduate/drop out/ kicked out. Say I took the money and invested it could I pay the loan people back interest free?

Well, I am no expert when it comes to student loans, but I'll attempt to give you good info anyway :D

If you get a subsidized loan, interest as well as payments don't begin until you no longer meet the requirements of it being subsidized, such as remaining at a certain GPA, not dropping out, taking full time credits... ect.

If you took the money from the loan and made money with it, you could potentially have the money itself pay for the intererest, so yes, you could pay it back interest free, theoretically.

However, keep in mind that the higher the return, the higher the risk. Unless you make substantially more than the rate you are paying, it would be better to just pay off the loan. Also, keep in mind that if you are planning on making more, there certainly is a chance that you can lose some (depending on the type of investment) If that is the case, you should be prepared to pay it back the old fashioned way.

If you can pay for everything without taking out student loans, I'd recommend doing that, as it will make life after college a lot easier. However, if that is not feasible, do what it takes to get your degee.

I hope that helped, if you have any more questions, please ask!

Thanks cleared up a lot of my questions.

okiedokie. i've read through this entire thread (you're the man, nosoup), so i'll drop a coupla questions that weren't already answered.

first off, i'm gonna need to pull credit reports from all three agencies for me and the new wife, so we can peruse them and make sure that the info is correct. where would you reccomend i go to get the best price? i'd do a google search, but the word "credit" in any google search brings up a mass of rubbish results that i don't feel like wading through.

next, some background. i have a pretty rough credit history, as does the missus. i'm not sure of the specifics in hers, so i'll just detail mine for the time being. in 1997, when i went to university (ha! an american just called it that!), started out with some student loans from the government, i think the total on those loans was about 2400. shortly after that begun, i did the typical fill out the credit form, get a free university teeshirt thing and found myself with an mbna card and a providian card, 2000 and 1500 limits, respectively. i started out being good with them, and used them for a while without issue. end of the school year rolls around, and because i've had much more fun than do real schoolwork, i'm back at mom's house. i found a job that paid very well for someone my age and responsibility level (almost nil), so i started using the cards. i soon maxed both of them, and just as my school loans were coming out of the 6 month grace period, i found myself fired from the job. no money, no bills get paid, lots of phone calls from collectors and the like. for the most part, i ignored them, because i was stupid and just didn't know better. basiclaly, i just kind've let them rot, ignoring the letters sent from them, and then from collection agencies, asking, requesting, and finally demanding my money. to this day, i still haven't paid anything back to them. so here comes the next question:

will the credit card debts fall off my reports 7-10 years from the date of original collection by the lending institution, or does that 7-10 year mark get extended every time a new collection service buys the debt and attempts to collect?

as far as the school loan is concerned, i'm gonna try to get ahold of them soon and try to avoid payroll deductions, which the latest threat letters from them have talked about. it's just the issue of putting the missus through school right now, which dosen't leave much for my bills.

secondly, i have a couple of rental issues that i don't feel should be on my credit reports, but are. firstly, i rented an aprtment with a roommate, whose cousin decided that the closet would be a great place to grow weed plants. after the roomate up and left for colorado in the middle of the lease, leaving behind no money and a pothead cousin, i brought the issue up to the leasing office, telling them that the roommate was in violation of the drug-free housing lease terms and that i wasn't willing to be financially responsible for the damage that the roommate's ferret did to the place (he failed to house-train the little bastard, so he fucked up a good percentage of the carpets). what recourse do i have in trying to remove that mark from my record?

secondly, in the rental department, i roomed with another friend whose credit was much better than mine by the time we got into that situation (can you tell why?), so she was listed as the actual leaseholder and i was listed as an occupant, not financially responsible for the apartment in anu way, shape or form. after being forcibly removed after an altercation, i expected to be done with the apartment, but instead found a judgement on my credit report for that apartment that i supposedly had no financial obligations toward. what would you suggest in that situation?

next on phred's big red list of credit boo-boos, i owe bank of america a bit over 400 for some stupid desicions on my part. as of right now, there's a chex-system mark that prevents me from opening any sort of checking account, anywhere. beleive me, i've tried. after paying off the money owed to bank of america, how can i be assured that i won't have any further issues opening an account, as i've heard horror stories about how even after paying off accounts, a person's chex-systems hold wasn't removed for years.

finally, a question about the missus' accounts. among some of her other credit goodness, there is a reposession resulting in a judgement against her. question. if the lender reposesses a car, how can she owe money on it? if they have the item against which a loan was taken out, beyond some fees and devaluyation, how can the demand more and what needs to be done to clear that up?

thanks in advance for your taking the time to read this endless tirade of "what not to dos" from someone who wishes he could do it all over again with what he knows now.

Alrighty Phred, here we go :D

First of all, I would suggest purchasing your credit bureaus directly from the credit reporting agencies. When purchasing them, see if you can find one with minimal information, as it will cost less. Also, try and purchase it directly from the company, instead of one of the affiliates that will generally charge you a lot more. For example, to get the "no frills" credit bureau from TransUnion you'll have to go the website, click on personal solutions, then TransUnion Personal Credit Report.

Here are the links for the websites:
TransUnion
Experian
Equifax

One final note, as far as that goes - although it would be a bit cheaper, don't buy the "3 bureaus at once!" or anything mentioning more than that specific agency's respective information. If you purchase a merged report, you'll get the information listed from all the bureaus, but it won't differentiate on which or how many agencies are reporting what. If there is an error, you would likely have to get seperate reports to see who is listing the error.

The clock starts ticking when the collections are first filed. However, occationally there will be an error and the collection may or may not have that clock restarted when it is purchased by another agency. It seems that they are getting more and more desperate, which is very likely, as that 7 year mark is coming up rather rapidly :D

If you want to avoid hassles with trying to get them removed from the credit bureaus when they are resold (most will sell them a few months before that 7 year mark) try contacting them and offering them a sum that would suit you. They buy that at a much reduced cost, so offer them only a fraction of what you owe them. If they refuse, simply contact the next company. I would suggest seeing if the people with the student loans would be willing to work with you to set up payments or something to avoid having payroll deduction. That way, you still are able to maintain some control. If an emergency comes up, you'll still be able to not pay them, whereas if they are taking it directly from your check, you won't have that choice.

Concerning your first rental issue - you said there was a "mark"... is there a judgement filed against you? Or something else?

Regarding your second rental issue - Double check to make sure that in the state you are living in that being listed as an "occupant" carries no obligations towards the financial aspects of the apartment. It may be as simple as getting a copy of your old lease. If it doesn't, contact the agencies that are reporting that and refute it. If they can't confirm the validity of it within 30 days, they are required to take it off your bureau. What likely happened is that the owner got a little overzealous and filed against both of you, just to make sure that he got his money.

Chex Systems... a banks best friend, the publics' worst nightmare...

Alright, I have bad news and more bad new for you. First of all, it is very standard practice not to allow anyone with Chex Systems records that are not payed in full to not open an account. Unfortunately, it is fairly standard to not let anyone with Chex Systems records, paid in full or not, open a checking account. Once you have paid the account in full, it will probably take 30 days or less for Chex Systems to report it closed. They are, in all actuality, pretty good about keeping everything up to date in a timely manner. These "Horror Stories" that you have heard, although they could be legit, are most likely people that were under the impression that once the institution is paid off, the Chex Systems record just dissappears. In fact, it simply reports as paid in full, and many institutions have policies regarding any record at all, open or closed. Once you have paid the account in full, I would call around to local, smaller institutions and see what their policies are regarding Chex Systems history. See if they allow accounts that were paid in full, or if that record will keep you from obtaining a checking account. Your best bet would be small credit unions in the area... the less technologically advanced they are, the better chance that you'll be able to get an account there, as they may not even consult Chex Systems.


Regarding the Mrs. Phredgreen...

As far as repossession goes, it works like this.

John, our imaginary friend, goes out and buys a car. Not just any car, a Brand new one! He's very excited, but instead of going to work he decides that it is more fun to drive around. With no job, he can't pay the bills, and the institution is going to repossess the car.

We'll say that John is going to make one of the two choices that most people in his position make.

Choice A) John decides he want revenge. He scratches the car, pours motor oil all over the inside, drops 3 pounds of sugar in the gas tank, and takes a sledgehammer to the engine. John goes to sleep that night, sleeping soundly, dreaming of the look on that bank guys face when he sees that car. That'll teach em.

Choice B) John realizes his error, and due to whatever reasons he cannot make his payments. John brings the car, title, and keys to the bank to surrender them.

After the choice has been made, the bank now wants to recoup their losses. There was an original loan on the car for $25,000.00. The moment he drove it off the lot, it depreciated $5,000.00. He put quite a few miles on, so now it is worth $16,000.00. His loan right now is still $24,000.00, which includes the original loan amount, late fees, and accrued interest. The bank wants their money back ASAP, so they try and sell the car. To get people interested in it, they will knock a bit off the actual value of the car, so they put it up for $15,000.00. Some random fellow takes a look at the car, sees what a good deal it is, and buys it.

So, we have $24,000.00 - 15,000.00 = $9,000.00

John still is going to owe $9,000.00. However, if John chooses Choice A, he'll owe much, much more.

Basically, Mrs. Phred will owe the bank whatever they were unable to recoup from reselling the car. It is in your best interest to get that car sold at the highest price... The numbers in the above example are likely not accurate, although they are similar to what a new car purchase would probably be like. Used cars depreciate much less quickly, but you can still see the general idea behind it.

So, there you have it - If you woudn't mind responding to the few questions that I have, I would be happy to give you some answers regarding them. If I missed anything, or aroused any more questions, please feel free to ask :D

Ok, lets see what advice you have for me. I thank you first off for helping everyone out.

Myself and my wife recently filed bankruptcy in Jan of this year. I had made quite a few bad choices with credit cards when I first enlisted in the army and ended up on the wrong side of a bad car deal. Together our debt was close to 30,000$. I know this isn't a lot but we could barely pay the interest payment each month on everything. We eventually decided to file bankruptcy. Everything was cleared. I voluntarily turned in one vehicle to not have to re-affirm that vehicle. We re-affirmed the debt on our remaining vehicle and paid the remaining loan off in 3 months (about 3500$) or so was left on it. We also re-affirmed a computer that we had purchased through Dell and paid that off in 2 months. Before when I had looked at my credit score it was in the bottom 2 percentile. Now, 7 months after filing it is around the 50% mark or so. My wife's is slightly higher I think around 650. I am currently deployed in Iraq and we are saving every penny possible for when I get out next June. I'm hoping that we will be able save close to 10,000 or so for living expenses and a down payment on a house. We currently have no bills other than the normal monthly revolving bills such as food, phone, gas and insurance. We haven't opened any new credit cards or had any loans of any type.

When I get out I know I am eligible for a VA loan but I am curious if this will be my best bet. We are planning on moving to the western slope area of Colorado where I know house prices can be a little high (100k or so). I'm just looking for advice on how I can maximize my chances of getting a good interest rate on a house loan or in general improve my credit rating. After being in debt once in our lives it is something that we have vowed to never happen again. Any advice would be appreciated. Thank you

Well, I would suggest getting another credit card, preferably 2 of them to begin building your credit. After bankruptcy, one thing that potential lenders look for is credit that has been established after the bankruptcy. Make sure, though, that once you get them you NEVER charge over 50% of the limit on the card, and if you pay them off in full every month you can avoid paying interested. It is important that you try to begin establishing credit as soon as possible, as you have a much better chance to get a loan, as well as improve your scores sufficiently to get a decent rate if you have good credit after a bankruptcy rather than no credit.

If you need anything else, just ask :D

make sure you have NO late payments on anything.. especially a mortgage if you have one after a bankruptcy... creditors.. especially in regards to mortgages frown heavily on lates after the banko.. for obvious reasons.

buying a business...

I'm looking to buy a business. I plan on being an absentee owner...

any info on qualifications for loans? same terms as regular mortages?

Well, the same general principles will be applied, but there are some differences. Basically, if your personal income can support both your expenses and the business expenses with a lower than 50% debt-to-income ratio, you'll be sitting pretty.

However, if you are unable to, some companies will give loans out based on the owners credit, as well as the business plan. Make sure that when you apply for your commercial loan, you have a well thought out, accurate business plan drawn up. If the bank believes that it will be profitable, they are far more likely to lend money out. If it is a well established business, you'll need accurate "books" for the business, likely for the last 2 or more years.

Depending on how much the business is going to cost, as well as the amount of equity you have in your home, you may want to take out a second mortgage to finance the business. Although you would want to speak with a tax professional to be sure, from my understanding it may be more advantageous tax-wise.

Nosoup-

This is a great thread! I think you are providing a quite valuable service.

My request is not for specific information, but to see what the general attitude in the retail banking world is like. I live in one of the areas with overheated housing costs, and I have gotten so tired of worrying about a collapse in the housing market that my wife and I are going to sell our home and move into a rental for a few years and save the equity for investing in something more promising.

Am I out of my gourd? I was the eternal pessimist when I worked in the financial securities business, bailed out of my investments in the summer of '99. I avoided the crash, but also avoided some good returns in the mean-time, too!

Right now, in my area, the cost of renting a home is something like half the cost of buying, without the sacrifice of a decent down-payment. You can not buy event slum-style rental without being underwater with your first tenant.

If you work with any mortgage underwriters, how do they manage to write loans with such craziness? Is the secondary market still so strong that all sorts or irrational prices are still supported at the retail level? What is a (supposedly) rational investor like me supposed to make of all this? :rolleyes: :rolleyes: :rolleyes: :rolleyes: :rolleyes: :rolleyes:

... my advice is keep the home.. as far as a long term investment.. I would be surprised to find one that is better...


If you are worried about the market.. lock your interest rate on your home.. and be prepared to sit on it for awhile if in fact the market drops off.. it should only be a matter of years before it turns around again.. I happen to work in the mortgage industry btw.. in case you were wondering what good my advice may be.

:crazy:

Actually - Primerica isn't all bad.
They do have good ideas regarding financial management.
The only issue is that yes, it is somewhat of a pyramid - and therefore they charge far too much for their services.

So my two cents? - Go to a seminar - learn what they have to offer you in terms of free advice - then go ahead and do what makes sense ON YOUR OWN. Eg: Life insurance as a vehicle for tax free investment growth. This is a reality. It actually works. Just go get a real life insurance product and not theirs.

If anyone is interested in Tax Savings (sorry - I can only help Canadians on this issue, there's only enough room in my brain for ONE set of laws) PM me and I can help you out as I don't want to take over this thread.


-=-

Now for a question for NoSoup.
First - thanks for all of the advice you've given everyone. You're a great benefit to this community.

Now for the question:
Do you have any experience with ForEx trading at the banks? Any tips you could throw my way would be beneficial.

I've got a thread on this - but not too many replies :D

Thanks for anything you can show me!

P.S. take a look at my thread if you want to see a link to the website I got my training from. Not sure if you know too much about the different businesses offering training etc, but I seem to like this site better than the most.

Well, I am going to agree with 90Degree on this one. Your home is an excellent investment - and regardless of the dips and gains in the market, over time the value usually appreciates.

As far as the general attitude of the mortgage industry... I can only speak for myself, although I would imagine that my views extend to at least some others in this industry.

First and foremost, we are entering market conditions that have never (at least not in recent history) existed before. There (at least in this area) is a huge surplus of homes that are currently empty simply because there were so many new homes built. Legions of new subdivisions went up, and those middle class families that were living in $125,000-$150,000 are building brand new homes with approximate values of $200,000-$225,000. Appreciation in this area -and I would imagine all over the U.S. - has been phenomonal. 10%, 12%, 15% a year!. On a 200k house with 15% appreciation you increase the value by 30k a year.

Now, with this huge flurry of new construction and upgrading to bigger homes, there are quite literally thousands of additional homes for sale. With so few buyers left the prices on homes nowadays are being driven down - the owners are competing with each other because it is no longer a quick sale - it is difficult enough to sell a home at all...

This is where my speculation comes in.

I would imagine that most people are going to get a wake-up call rather quickly. They purchased homes for far too much in hopes to make some quick dough with the crazy appreciation. They also took really crazy loans out - with really, really tiny payments. For instance, I have one client that took out a $423,000.00 Loan - on a 3.25% balloon with an interest only payment. Basically, his payment on that huge house is only $1145.00 a month. On a typical 30 year mortgage at 8% (just about the historical average rate) his payment would be over $3100.00 a month. His plan was to buy it, sit on it for a couple years letting it appreciate like mad, then sell it before the balloon payment - it has been on the market now for almost a year for the price he bought it for, and he still hasn't been able to sell it. He only has a few months to go before his balloon payment is due. There is absolutely no way he can pay that each month, so he will likely have to declare bankruptcy or take some other drastic measure, unless rates continue to stay low. People that "bought the most house they could afford" with the ultra-low interest rates being the only reason they were able to afford so much, are going to have a rough time coming up with these payments when the interest rates rise or when their ARMs or Balloons are up.

The huge amount of empty homes and the high number of people now supporting two mortgages are going to have to crack at some point. I think that these people will become desperate to sell, at which point the "real estate bubble" will pop. I have no idea if there is going to be a catastrophic crash in real estate prices or not, but I am nearly certain that they will drop significantly. The only reason (in my opinion) they haven't so far is because the public doesn't really understand the dire situation the market is in. We are still under the impression that we are in the same situation we were in a few years ago, when the rates had first dropped.

As far as the mortgage underwriters being able to underwrite with all these crazy conditions, they simply use the only information they have available - current information. It is very difficult to speculate on what will happen in the future with any degree of certainty - and if history repeats itself, the real estate market will always bounce back.

Real estate has always been a most excellent investment - seldom does it ever take large dips, and when it does, it generally, providing you sit on it long enough, will come back - and even continue to appreciate.

If you do decide to sell your home, I wouldn't sell out of fear. Sell it because you are getting an excellent price on it, or it requires too much maintenence, or because you prefer to rent, ect. The market may drop, but it generally comes back. This is especially important to remember if you were planning on staying there for a while. If you are, regardless of the drop, I can almost guarantee that over the long run you won't lose money on real estate, as long as there are no extenuating circumstances.

However, with all of the above information - make sure you take it with a grain of salt. I am but a mortgage lender, not an economist. Our situtation may be unique here in Green Bay as well.

Good luck with whatever you decide - and if you have any more questions, just ask!

My apologies -

I have woefully little experience with the foreign market exchange - Therefore, I cannot really say anything much about it. Good luck on your search - there may be others here that can help :D

For you regular visitors, I updated the first post of this thread -

I created a couple more specific threads to let people find information a bit easier than sifting through this monster - feel free to continue posting in this one, though :D

NoSoup,
Wow, what a great thread!

Here's my situation and question:

I have had a bank account with one institution for some time, and about 6 months ago, shortly after my 18th birthday, I overdrew. Due to various demands on my time (school, and various extracuricular activities aimed at college scholarships), I was unemployed, and so it was some time before I was able to rectify the situation. When I once again I had some money I went to the bank and worked out a deal to pay off the balance to the collection agency they had recruited, and put some money back into the account.

When I went in, it was the Thursday or Friday before the 4th of July and sort of late in the afternoon. The guy I talked to said he would take care of what he could that day, but some things would have to be taken care of Monday, and while he would be out Monday, someone would handle it.

Fast forward a couple of months, I had assumed the debt was taken care of, and had since had a fairly fluid bank account that I was never sure of exactly where it was, due to the adding and subtracting of funds related to student loans, and the costs of moving into a college town. I was home one weekend when I recieved a phone call, asking me fairly politely something to the effect of "where's our money?" I did some investigation, and the debt was never taken care of... Which leads me to my current perdicament. I am riding a razor edge, balancing my phone payment, my rent payment, and some other expenses, (no car, thank God) and waiting on some funds to clear the University so I can be back in the clear. I don't have the funds to take care of the debt right now, but (hopefully) within the next 2 weeks I will. When I do have it, what should my course of action be? Should I, and how would I, apprach them about coming to some terms about a reduced payment, or some sort of payment plan? Any extra advice?

Thanks so much!

I'm going to chime in with...

you should ALWAYS follow up. It is your responsibility to do so. Never trust anyone to complete some task without double checking at the deadline that it complete and you have some record or receipt.

Well, debt collections agencies buy your debts for a reduced price, so hopefully you will be able to negotiate a lower price.

Basically (assuming you have a phone number) just give them a call and tell them that you are a student, have many debts out there, and can't afford to pay them. However, you would likely be able to come up with $X to give them on X Date if the debt would be cleared. Make $X be whatever you feel comfortable paying - but it is unlikely they will accept anything less than... oh, 70%, simply because the account is newer. If you want to give less a try, go ahead, but I would imagine the chances of them accepting less are going to be slim.

If they don't accept, you have a couple of options. The first option would be to pay the balance off in full, the entire amount they are asking for. The second option would be to let the account just sit there for a while, while they get more and more anxious that they aren't going to get any money at all. After a period of time, give them a call, and it is likely that you can settle the debt for much less, maybe even only 50% of what you owe. However, the second option does come at a price, the cost being your credit.

It's pretty much up to you to decide if paying the extra would be worth your credit rating, especially considering the current state of it. If they refuse your initial offer, ask them if they would be able to accept any less. When on the phone with the agency, make sure you sound like you are doing your best to pay them as quickly as possible, but you are just in a really tough situation. Maybe the person you are talking to has a bit of a heart, though in that business it will be unlikely.

I hope this helped out - if not, feel free to ask again!

Good luck

Oh, and for future referance, I am going to have to agree with Cynthetiq here - he's right on the money. If you don't follow up on something that someone was supposed to when it concerns yourself - it's your loss, not theirs, unfortunately...

Hi Soup,
Here's my story......1997 was a bad year and I sought legal advice for relief on a credit card (approx $3k). The attorney said don't pay another nickel to them, instead pay us for two years ($39.00 per month) and we will settle with them for you at pennies on the dollar. In June of 2002 the lawyer contacted me with an offer to settle for about $1700. They did the deal but I never recieved any correspondence (that I recall) stating that this matter was resolved. The only thing I saw was that the credit card company had reduced the amount they were reporting I owed on my credit report. Also, the lawyer had moved out of state and then out of business....Obviously I made some poor choices and then some more after that....

In the summer of 2003 I began the process of cleaning up my act and paying off old debts and judgements in order to buy a house. My mortgage broker went through my credit report line by line and told me what I would have to pay off in order to qualify. For this particular debt, he said that the card had probably accepted the payoff and the balance stayed in some type of write-off status....Anyway, I got the mortgage and never sent another dime to the card company. My credit score is about 640 and I have opened other credit accounts since then, but also have been turned down by one. Now, that old debt has apparently been bought by some collection agency and they are hounding me for about $1k to pay off the debt or send them in writing that I dispute (I'm guessing it will be impossible to prove I settled with the card in 2002 since the only thing I have is the payment that they recorded). I don't need any credit in the near future and expect that this thing will drop off my report soon. Will it drop off soon? I quit paying them in 1997 except for the one lawyer payment in 2002. Will it go away 7 years from 97 (which is perhaps why it got bought and someone is trying to make a buck off it) or 7 years from 2002? Maybe I need to look at my credit report to determine this...if so, can you tell me what I should look for regarding this account? I'm thinking they can rot in hell since my credit isn't too bad, I don't need any credit right now, and it might be dropping off my report real soon. Please let me know what you think and how I can make sure it goes away in the proper amount of time....

Cheers

toverfie, there's some really aggressive collectors out there now.

I have something that was written off over a decade ago come back to haunt me. There's federal laws re: collection and these companies have been skirting around them by selling them back and forth to each other then claiming that the cease and desist or proof of documentation request doesn't extend to them anymore.

Unlike your situation, mine aren't on my TRW/Equifax or whatever it's called, and didn't appear over the past 13 years.

In theory, it should fall off 7 years after the collection was opened, so it really depends on when that was. Cynthetiq was right on the money when he said that it causes issues when companies sell debts back and forth to each other. Had that not been sold to a collection company, it would have fallen off 7 years after that "write-off" status had been put on your report. The next time the collection agency calls you, see if they are willing to negotiate a lower fee in order to clear the debt.

I hope this helps! If you have any more questions, just ask!

Obtain credit once again....(bankruptcy)
 

My wife and I filed for bankruptcy back in Febuary of this year, and I was wondering. How soon after the bankruptcy is completed can you begin to see your credit rating go back up? Any tips on how to raise it at a decent rate over time...We'd like to eventually get a home, but we really need a car ATM...

Thanks,
Ben

Ok, I dont really have credit and Id venture to say the credit I do have is bad. Lately Ive run into a major string of finacial trouble and there is little I can do about it. Im only 20 and have applied for credit cards before, all being denied for reasons unknown now. Id really like a credit card for the emergencies Ive encountered and for the situation I am in now it would HELP greatly.(300% interest or not) anything helps atm. I dont really have family options as my family is helping me a lot with other things, they do a lot by taking care of a few things for me that I know go well beyond their means. I just dont understand it all and that why I cant even get one of those dumb Bank Student Credit Card thingies at god awful interest levels.

Sorry for the delay -

Basically, you scores will slowly begin to rise as soon as your bankruptcy is discharged. To help them increase faster, I would suggest opening some new trade lines - and always, always, always pay them on time. This is especially important once you have declared bankruptcy, as some lenders will lend out after bankruptcy, but only if there isn't a single late payment after it is discharged. To begin getting some credit back, I would suggest opening some secured lines of credit, possibly a secured credit card as well.

If you need anything else, just let me know!

Hmm... It is difficult to help you as there are very few details in your post, but I'll do my best :D

First of all, If you run into financial trouble, it is typically a bad idea to take out high interst loans for a temporary solution. Of course, there are exceptions to every rule, but typically it is not advised. You may want to consider other options, such as decreasing your living expenses or obtaining additional income via a second (or third) job.

The reason you are likely not getting approved for the credit cards is difficult to determine, but I would imagine it would be due to the bad credit you had mentioned. Even the worst credit cards still have underwriting (approval) guidelines - and even though they might not be that stringent, you still must qualify.

Hopefully this helped you out - if you care to get a little more detailed with your situation, I may be able to offer more specific advice. Until then, good luck!

Thank you for responding :) but I think I am an exception to the rule.


right I do understand I must qualify(though I know people who have had cars reposessed and still get approved) but I cant get a second job. As it is Im in school from 9-5 mon-thurs(9:40-5pm T/Th 7:30-5p M/W) and my temp staffing job allows me to work from 5p(more like 6p) to 1 am and on Fri-Sun I work 2pm to 10pm. Id get a second job but I have to study and sleep and pretend I care about being a human sometime. As it is I dont pay for my groceries(my bf does) and I dont pay my car insurance(I love dad) Id move on campus BUT it involves adding $7,600 to my tuiton and moving home at the end of the school year..then moving back once it begins, quitting a job I might get, or giving up this great flexible temp job that keeps me alive and allows me to look for another real job and not be working the corner. Though it has crossed my mind. So as it is I live on a poor college kids budget.

I dont go out.. if I do the bf pays. Even the cat food.. bf pays. I have more than worn out my welcome with my parents(and they keep giving) and by giving I mean they have probably sold their souls to help me but they cant give me enough to get out of this mess.

I hope you still read this thread, but...

I am 18 and looking to get an auto loan. I'm not that good with money at all and I have NO idea how it works, all I know is that they give me money to pay for a car, and I pay it back over time. Do you have a guide or any important points to help me through getting an auto loan and how it works, to make sure I dont mess up somewhere and get on the bad side of the bank?

Yep, still do :thumbsup:

Basically, what the bank will do is give you money for a vehicle, and you pay it back over time - with interest - of course. They will file a lien on the vehicle, which basically means that if you don't make your payments, they have the option to take it away from you and sell it.

You will be more likely to get the loan if you have either a co-signer or previous credit, and also if you have a downpayment for the vehicle.

You will also be required to carry full coverage insurance on any vehicle that has a lien on it, to protect the financial institution lending you the money.

If you are going to shop around to compare rates, do so on the same day, as it will damage your credit rating less. To stay on the "good side" of the bank, all you have to do is make your payments on time and keep your insurance current.

Hope this helps - if you have any more questions, just ask!

How common/easy is it to receive 7(a) loan guarantees from the small business administration for setting up a business? (I'm considering taking out 10-20k to start up a recording studio.)

Hey again NoSoup!

I've asked questions before and you've been very hepful, thanks for that.

As you might remember, I've got credit card debt up to my ears. I've committed myself to pay them off as quickly as I can. I set up a budget for myself and it looks like i'll be debt free (under my current budget) by 2008. That's about $19,000 paid off.

So, my question is about my credit score. Last April I purchased my credit score online and found it to be about 650. I just checked it again last week and it was 680. I'm curious to see if it's a good idea to check my rating once a year. Or if that even is worth it. I was actually surprised to see that the rating went up. I've aquired quite a bit of credit card debt since last April, so I was sure the rating would go down. But I didn't account for the fact that I paid off a lot of my car loan in that time as well.

Anyway, to recap, is it worth it to check my credit score yearly? And how quickly will it take to make my credit score go up? The negitives I have on my report are that I have high balances based on the credit available, that I've applied for quite a few cards, and that I had one credit card that was over 60 days past due. And that was a whole big crappy situation with Best Buy back in 2000. May Best Buy rot in hell.

Unfortunately, I am not very well versed in small business loans - typically, the commercial loans that I do are for purchase of real estate only, not to finance a company.

My apologies for not being any more help :(

I would certainly recommend taking a look at your credit annually. To see the score is fine, but more importantly, make sure that everything is reporting accurately, and there aren't any accounts open under your name that you didn't open.

As you pay your balances down, your credit score will increase. In addition, as more time passes between any adverse reporting (Best Buy) and the present time, they less it will affect your score. One thing that will help your score a bit more is to have fewer inquiries on your bureau, by applying for credit only rarely, and when you are going to compare interest rates on a loan or card or see if you qualify, apply at several different companies on the same day, as it counts as only one inquiry.

Depending on the type of credit cards you have open, it may be beneficial for you to pay off any "retail" cards. Retail cards are cards that you are able to aquire at retail stores. Best Buy, Shopko, Victoria's Secret, Barnes and Noble, ect are all considered a step lower than conventional credit cards.

Unfortunately, there is no way to really predict how quickly your score will increase without me having a ton more information, and even then - predictions about such things are usually very.... approximate.

Hope this helped - if you have any more questions, please feel free to ask!

P.S. Congrats on setting up a budget and taking care of your credit card debt. It may be difficult, but it will save you an incredible sum of money and I bet will feel quite wonderful when you mail that last payment to the greedy bastards :D

OK NoSoup. How the hell can I get out of my lease [SUV] without paying through the teeth!

Thanks, NoSoup :)

I do have a few retail credit cards. At the moment, the only one with a balance is my Gap card, and that will be paid off soon.

You're right, it's going to be so nice when I mail off those last payments :D

What exactly are hard money loans?

My Apologies...

I don't think I can help you here, although I suppose you could check the terms of your lease and see if any of those terms are/have been broken...

A hard money loan is a short-term bridge loan that is used for acquisitions, turnaround situations, foreclosures and bankruptcies. Interest rates, although high on business hard money loans, are less costly than taking on a financial partner(s) or losing the real estate opportunity altogether.

Hard money real estate loans are ideal for borrowers who are unable to obtain funding through a conventional source. The properties or the borrowers are often clouded by legal or operational problems. Business hard money loan lenders can often help solve the problems and get the property repositioned for a conventional refinance.

Hope this helps!

I need to know about Bridge loans. Is there a way to get one for folks who have a credit score lower then 620?

Basically, a bridge loan enables one to purchase a new home while paying little or no money towards their current home, ideally until it sells. Bridge loans can be structured to completely pay off the old home's mortgage or simply to add the financial obligation of the new home to your current debt.

Typically, you must obtain the bridge loan from the lender you use to finance your new home. Usually, the loan is structured with a short term (often one year or less) and a substantial amount of prepaid interest.

In most cases, a bridge loan is used to pay off the existing mortgage, with the remainder (minus closing costs and prepaid interest) going toward the down payment on the new home. If after six months the old home has not sold, the borrower begins making interest-only payments on the loan. When the home sells, the bridge loan is paid off. If it sells within the first six months, any unearned interest payments will be credited to you.

As far as obtaining one with a score of less than 620, it depends on the amount of equity you have in your current home.

However, even if a 620 borrower had a large amount of equity, it would still be extraordinarily difficult, if not impossible, to obtain a bridge loan for that borrower.

Hope this helps!

Debt Consolidating
 

I have total debt of $13,000 (not including my car) which includes $6,000 in one credit card and $7,000 in an engagement ring. I'm paying around $350 each per month just to pay a little more than the minimum. I just got married and considering buying a house in the near future. I was offered lines of credit from two different companies, but I'm not sure if this would hinder our chance of a loan. My Fico score is around 685 and my wife's is around 710. After all the bills I'm pretty much living paycheck to paycheck. What should i do? Thanks.

I know this can be hard to do, but I'd hold off on buying the house for a while until you are in a better financial position.

I assume that you are currently renting - if anything breaks, the landlord will fix (and pay!) for it. If you are currently just scraping by and you needed to get something expensive replaced/repaired in your home, you'd be in a world of hurt without a lot of options.

You have decent scores, but paying down your credit card balances would improve them further. Typically, if you are able to get your scores over 720 you'll qualify for the best pricing and most flexible programs.

I would recommend paying off your debts, and then saving up for a downpayment - a minimum of 5% of the purchase price + an extra couple of thousand for the costs involved. The more you can save up, the better position you'll be in, but there is a world of difference in interest rate for most 100% programs vs 95% programs.

You may want to take a look at the money you spend on a monthly basis, and see if there is anyway you can cut costs without sacrificing your lifestyle very much. Another option would be for you and/or your wife to get a part-time job for additional income. A combination of both would likely help get you where you want to be the fastest - but make sure that the money that you are saving/additional money you are earning is going towards your bills. After you have paid off your debt, use a bit of the money to reward yourself - you've earned it.

As far as the line of credit goes, I would check and re-check the terms that they are offering you. Make sure that it is actually advantageous for you to accept them, typcially transferring balances around will do nothing but damage your scores with the additional inquiries on your credit report. Often times the "personal line of credit" loans have outrageous interest rates and ridiculous pre-payment penalties.

When paying down your debt, make the minimum payment on all your debts with the exception of the account with the highest interest rate. Take every extra penny you can find and put it on that account. Once it is paid off, take all the payments you were paying on that account and roll it over to the next one with the highest interest rate. You'll likely be able to pay off the debts sooner than you think.

Hope this helps - good luck.

If you have any more questions, please feel free to ask!

Thanks to NoSoup and the gang for providing a lot of good information here.

So here's my situation- I'm moving to a different state next year, for law school (WUSTL), but I'd like to begin the home buying process in advance of the move, since my financial situation is extremely better with the job I currently have. It'll be a modestly priced house (likely below $150k) that I'll be able to afford, so I'm not concerned about my lack of significant income during the first year or two of law school, I'm just concerned with getting a mortgage broker to give me the $150k in the first place.

Any recommendations? My wife and I are well above the income median for St. Louis (where we're going) with our L.A. jobs, but we'll likley be below the median while I'm in law school. Other key factors - we don't own currently (rent, for more than our St. Louis mortgage payment WILL be), and I'm currently the leasee of an apartment in St. Louis. Thereby- I'm wondering if I could claim that I've held a residence in St. Louis, but I work in Los Angeles, simply for the purpose of getting the loan? I realize that's misleading the broker, but getting the loan is of prime importance, and it's dishonest.

In the end, my wife and I just want to avoid throwing away three more years of rent payments when we'll be able to afford (and prefer) to buy.

Additionally, both our credit scores are slightly below 700, we have one car payment ($500+), and every credit balance is below 50%. Oh, and we have about a $10k 401k we may draw the down payment from, as future earnings should be significant enough to replace the money. Thanks in advance!

As I am only licensed in the state of Wisconsin, I am not sure if all this advice will be applicable or correct in St. Louis, but here is what I think based on my knowledge of the laws around here...

As far as residency is concerned, I don't think that will be much of an issue unless you are applying for government loans. Here in Wisconsin, we have no regulations concerning the borrower's current state of residency.

However, to qualify for owner occupied financing, you may have to sign documentation that you are planning on moving into the home within a set time frame - typically 30 days. Not that I am recommending doing this, but no lender I have worked with actually checked to see if the property is owner occupied.

As far as utilizing money from your 401(k) for the downpayment, It likely depends on your situation. If you are confident that you will be able to put enough away later for a comfortable retirement and could get better financing using those funds, I don't see any reason not to. Keep in mind, though, that the longer you wait to refill your retirement account the more money you will have to put in just to recieve the same amount upon retirement - compounding interest is your friend.

Your scores are decent, but I would improve them before buying a home - there is a world of difference with scores less than 700 or greater than 700... ideally, you can get your scores to 720+. Check out http://www.transunion.com for options on purchasing your scores. Buy a tri-merge (all three credit reporting agencies) as well as the option that tells you what your scores are. The report will let you know what is damaging your scores the most - fix whatever you can ASAP, as it could potentially save you tens of thousands of dollars in interest. Purchasing your scores yourself don't count as an inquiry, so it won't damage your scores.

Prepare for owning a home by having a bit of cash saved up for emergency repairs. Owning a home can get real expensive, real quick if a couple of major things go wrong in a short period of time.

Hopefully that helps - if you have any more questions, please feel free to ask!

Maybe this is an idiot question, but what EXACTLY is APR? I need to know what it is in terms of actualy money that is spent... for example:
Let's say that I buy stuff in May with a credit card, and I don't pay the credit card company until June, is the APR a certain percentage of what I spent in May (in this example at least) that gets added on to what I owe them? Or is APR something I have to pay even if I don't use the card at all?
I need a credit card, and I need it bad. I just want one so I can get a cell phone.

EDIT: Greeneyes already addressed my question through instant messaging. Many thanks to her :)

I have another question that is probably less foolish...
I can't seem to get a credit card because I don't have enough "established credit"... well no shit. I hate credit card companies already... anyway, I was reading that each application for a credit card appears on my credit report. What bullshit. So now I have like 10 rejected applications, which, as I read, is pretty bad, because it makes me look desperate for credit. Well, fuck 'em. Anyway, I read that it's much easier to get a gasoline card, like with Chevron or something. Okay, that's great, but how much will I have to spend on that card until I have sufficient "established credit"? Or is it based on how long I've had the card? 'cause I really do need a cell phone.

It doesn't actually show on your credit report that you were denied, just simply that companies had inquired regarding your current credit standings. Depending on the company, it may be easier to get a gasoline card to begin to establish credit, but instead of getting a card that doesn't offer the most spectacular terms while only being able to use it at very limited places, I would recommend just getting a secured credit card as well as possibly a secured installment loan to establish credit.

It will take a minimum of six months of continuous reporting to obtain a FICO score for the credit reporting agencies. The amount of money you spend on it doesn't matter, if you spend $1 on it each month and paid it off in full it would still report as being used, thereby establishing credit. Be careful, though, not to allow the balance of your card to exceed over 50% of the limit of the card, even if you are paying it off in full each month.

Hope this helps - if you have any more questions, just let me know :D

Friend in Debt and Jailed
 

First I would like to commend you for doing this. I dont know if I should be asking you or an attorney this question but I figured I would start with you first. A long time friend of mine has an outstanding online gambling debt with pay-pro, an online payment program based in Central America, of over $4200 and is in the clink for about 6 months. I read a question on this forum of the same sort however not under these same conditions. 2 questions, first what will happen if he neglects to pay the debt altogether since it out of the US and online gambling debts may not likely be enforced in the states. And second since it will be 6 months before he will be able to pay, what will likely happen between now and then. Thanks.

Alright, take everything I say with a grain of salt as I am not very well versed in the specifics of international debt, or specifically gambling debt either...

From my understanding, your friends debt is not going to be considered an "online gambling debt." If he owed money directly to the online casino, it likely would be, but I think pay-pro is just a service that allows one to transfer money to the casino. If that is the case, I'd imagine it will likely follow the same course as all debts that go delinquent in the states - they go to collections.

As it will be 6 months before he pays, It's likely that his debt will be sold to a collection company long before he gets out. Terribly bad for his credit, but he'll have a much better chance of negotiating the debt down to a lesser amount. Depending on how his credit is at the time, if it is really, really terrible, he might just want to not pay it for a while, as the longer you wait to pay a collection agency the more they are typically willing to negotiate.

Normally I wouldn't recommend keeping a collection out there, but I'm going to imagine that since he won't be able to pay that because he's locked up for six months, his other debts won't get paid either - effectively ruining his credit. If that's the case, bankruptcy would be an option I would seriously consider, depending on how bad his situation is.

Good luck - hope this helped!

I am a junior in college and right before the semester ended I found out that my loan for the semester had been declined because my cosigner lost his job. I have asked my family if they will help me and my parents are the only ones who might be willing. The only problem is that if they agree to cosign they want me to live at home and go to a school closer to home (my parents live in Colorado and I go to school in Michigan). With one year left, I don't want to have to transfer. I do not have the credit necessary to apply for a loan on my own (it's not bad credit, I just don't have two years worth of credit history). Federal loans are not an option as my college does not accept federal money. Are there places where I could get a loan without a cosigner or with a cosigner who has excellent credit but no job?

Well, you may not have to have two full years of credit history to qualify for a loan. I would suggest applying just to see if you can qualify.

A couple of things I would suggest - first of all, you may want to have a sit-down conversation with your parents, where you explain your reasoning behind wanted to stay where you are. You should also find out the reasoning why they want you to move back home and change schools. See if you can work out your differences and come to a conslusion that way.

As far as your questions regarding loans go, I would imagine the answer is "yes" to both your questions. As long as you have some credit, you should be able to get a signature loan - obviously, if you have poor credit or don't fall neatly into the underwriting guidelines, you probably won't get favorable interest rates or loan terms, but it may be a viable last resort. As far as your current co-signer, it is possible for someone with excellent credit to get a loan without a job - I am not familiar with the Colorado area, but you probably have several different options when it comes to getting loans. If you are looking at education specific loans with your cosigner, they may have different guidelines and not be able to approve him/her without a job. However, you could take a look at a couple more... unconventional... ways of financing school, such as taking out a signature loan or potentially even a mortgage. Obviously, your co-signer would have to have a home with equity in it and be willing to risk it for you, but providing that is feasible there are loan programs out there where the lender doesn't verify the borrowers income, assets, or even if they have a job. As far as the latter two options, though, you would have to begin making payments immediately - probably not an issue of you are working right now, but if you are just going to school full time it may be difficult to balance those payments in with your meager (I'm guessing) typical college student budget.

Hopefully this helped, if you have any more questions, please ask!

q: regarding corporate credit cards in one's own name.


Wife goes on business trip, makes all charges. Is instructed by boss to let first bill come and let it go unpaid, pay on second month once expenses check has been cut and paid.

does that missed month count against her credit score or show up at any time?

Corporate credit cards should not be showing up on your credit score. You are an authorized user, not the primary. My corporate credit card has never shown up on my Beacon.

(Sorry to jump in and hog your thread, No Soup... I am a loan officer myself so I'm not just talking out of my ass. :) )

Dear NoSoup and greeneyes,

Thanks for doing this - I've been learning a lot by reading this thread. I've got a problem of my own making, and I'm not sure what to do, nor is my family (who has never had a credit problem in their life other than that they NEVER carry a balance...).

I had a cell phone through Sprint when I was 19. About 9 months ago, my financial situation came to be that I could not make payments on it anymore, nor could I afford the $200 terminate contract fee. I called Sprint, who told me to pay or... well, PAY. Well, I can't make money out of thin air, and my financial situation did not clear up within these 9 months. I found out today that $500 has gone to collections from Sprint.

What should I do next? How do I take care of this so that maybe, one day, I'll have a chance at getting a home/auto loan? My credit report now consists of one negative deliquent account, which looks miserable I know. Had I the resources to take care of this before it went to collections, I would have. I'm not going to bore you with why I couldn't - like they say, money problems are full of drama.

Thanks for your input.

Greeneyes is correct - as she is only an authorized user, it shouldn't show up on her bureau - however, I have seen it happen, relatively frequently, where the card that a person is only an authorized user has it reported to their bureau. Fortunately, they are able to remove it by contacting the credit reporting agencies - a bit of a hassle, but usually worth the effort.

Greeneyes: Not a problem - glad to have the help and someone checking my work :D

Well, I would recommend that you contact the collection agency - if you have the money to pay it off, offer to pay the full amount - providing they will take it off the credit bureau all together. Hopefully that will work - you may be able to negotiate the debt down, but they will be less likely to be lenient with the bureau if you don't give them all the money.

If they refuse, you have nothing to lose by negotiating the amount of debt down and at least getting it closed. Time is your friend - unfortunately, you just learned a tough lesson that will affect you for the next seven years, but it will hurt less and less as time goes on. I would suggest you start building some credit up to help get you set up for when you want that auto/home loan - it's never too early to start.

For a bit of additional info on building credit, you can refer to this link. If you have any extra questions, please let me know!

Also, if you have any questions regarding the specifics of negotiating with collection agencies, feel free to either post em or send me a PM.

Good Luck!

NoSoup & everyone else thanks for providing this valuable service!

I have extensive medical bills the last few years and now have more than $25k in Unsecured Debt with a balloon note for $25k up in 6 years. Should I try credit counceling or continue just trying to pay it down? If I could just get the one card with $18k on it to give me a fair int. rate we could do it. But they won't budge off a 27.4% rate! Assholes! Thanks for any advice.

How is your current credit standing? Do you have 25k in Unsecured debt on the balloon loan with an additional 18k credit card balanced at 27.4%?

At this point, I wouldn't recommend credit counseling. You are paying for a service that may not be beneficial to you at all, not to mention something you can do yourself. More importantly, getting credit counseling is roughly the equivalent of declaring bankruptcy when it comes to the negative impact it will have on your credit report.

Hope this helps - and I might be able to help a bit more once those other questions are answered :D

Last June we had an Experian score of 729. We have an 18k credit card balanced at 27.4% on one card and probably another 8-10k on other cards. A 25k home equity balance due in 6 yrs. We are now trying to pay more than minimum payments but it's tough. If there's any way get that 27.4% rate down it would be easier. Now they take $450 out of $500 for interest every month. We've tried to get them to lower their rate but they won't budge. Any suggestions would be greatly appreciated!

Well, with a score that high, you certainly shouldn't have an issue getting it lowered. Try applying for a different card - at least one with a lower rate, but ideally one with a 0% Intro.

I personally have a Chase Platinum that gives me 0% interest on balance transfers and purchases until something ridiculous - like December of 2008.

If you can get a card like that, the additional $450 that is going to interest would be going towards principle instead - a huge difference, as I'm sure you'll note. Paying at least $500.00 off in principle each month will make the balance drop quickly.

If you are unable to get a card with a high enough credit limit, I would take a look at getting a couple and spreading the balances around at 0% (or at least much lower) interest rates.

You're in a tough situation, but I think it will be easier than you think to get out of - best of luck!

If I can be of any more service to you, please let me know!

Hi NoSoup,

I filed chapter 7 banruptcy about a year ago. I need a loan for about $3000(Personal loan). No bank wants to hear me. They said I would need a strong co-signer. I don't have one. I was $28,000 in debt by the time I was 21. My question is, how would I get a loan, if I can even get one? Are there any special programs I can go through to better my chances. I am ignorant to this subject. Please help me! :eek:

Well, a couple of questions for you -

Have you attempted to re-establish credit since your bankruptcy?
Do you have anything that you can use as collateral? (Life Insurance, Vehicle with equity in it, Stocks/Bonds, ect)
What do you need the money for, is it worth paying a completely ridiculous amount of interest on?

$28,000.00 is a lot of debt, but whether or not you declared bankruptcy should have been more dependant on the type of debt that you had.

For instance, I am well over $250,000.00 in debt and I am only 21 as well...
However, the vast majority of that is because I just purchased a duplex, so I feel pretty comfortable with it, as the duplex is an investment.

Although it's a bit late, what type of debts did you have? Are you avoiding putting yourself in the same situation again?

This might not be a technical question, but rather a personal one.

I have been thinking about getting into the mortgage business for a little time now. Could you tell me how you started? I'm planning on interning for an office for a while and then seeing if they will hire me. The other way I found is to apply and become a telemarketer for some time until the company you work for will take you in as a loan office.

What advice, coming from where you are now, could you offer me? Should I get a real estate license? What can I do to make the process easier?
Thanks.

Well, believe it or not, but I actually got started as a teller at a Credit Union, and worked my way up. Once I got my foot in the door there and showed my sales ability, the Credit Union moved me into a position that would be more benefitial (read: profitable) for them. My job then consisted of doing pretty much everything - opening all types of accounts, opening, closing, and drawing from IRAs, consumer lending (vehicle loans, boat loans, ATVs, RVs, personal loans, ect) and a bit of 2nd Mortgages.

I was then offered a job as Assistant Manager of the Mortgage Lending Department of a national bank, which is where I became much more familiar with mortgages. I stayed there for a while, but then finally decided that it was time to start being a broker.

Hmmm... Advice...

First off, expect no training. If you can find a brokerage that does offer training, that's great, but at least around here you pretty much rely on previous experience. Admittedly, brokering is completely different, so it doesn't really help as much as one would like.

Secondly, you now have to take a licensing exam for you Loan Originators License, as well as take continuing education classes... get it over as soon as possible - the classes often fill up near periods of renewing.

I would recommend you don't get a real estate license - I'd recommend taking the classes, as knowlege is especially important in this business, but forego the test for the license. If you are not licensed, you have plausable deniablity - if you are licensed, you can be held responsible for any errors on any offers to purchase that pass through your hands - which will hopefully be a lot :D

Hopefully that answers some of your questions - if you have any more or want me to clarify, just let me know :D

Thanks that was a lot of helpful information. I'm kind of new to all the structural parts of loans and mortgage in general. Could you explain to me how brokering is different?

Well, if you are not brokering and doing mortgages it is likely you are working for a Bank/Credit Union. If this is the case, it is likely that the institution you work for is actually lending the money. This allows you to have a lot more flexibility with your own products, get exceptions much easier, and you personally only need to know one institutions products.

A Broker, however, does not typically lend money. Basically, my job is to find a client, find that client a lender, and hook them up. I take care of the application process, obtain information/verifications from the borrower(s) Work some figures - and sometimes magic, lol, but in essence I am just the face that the customer knows. I have to know - with intimate detail - products offered by many different companies (currently we work with nearly four dozen lenders, each lender usually has a large variety of products. One that we work with has over 700 programs) I need to figure out which product/lender will suit the customer best, be it the best interest rate, highest loan to value ratio, or just getting the deal closed. I have very little flexibility when it comes to getting exceptions, and the closing and funding is dealt with by Title Companies instead of the brokers. In most instances (of course, there are ALWAYS exceptions) the title companies will be in charge of getting the closing docs drawn up. In a typical purchase transaction, you need to find a date and time that works for the buyer(s), seller(s), real estate agents, title company, and yourself.

Simply, brokers buy and sell money at different prices, which leads me to the next point - we are paid vastly differently than most, if not all, institutional employees. Most brokers are straight commission, and the way you get paid takes a bit of getting used to. We can be paid by the lender, the borrower(s), sometimes even the seller(s) - or a combination of all three.

You'd want to make sure that you have the following characteristics before you even consider brokering -

• You deal with rejection well
• Salesperson at heart
• Willing to put in long hours when necessary
• Handles stress well (very important, probably the number one reason some people don't hack it)
• Comfortable with a fluctuating salary - with enough savings in the bank to handle a couple bad months
• Network well (a significant portion of business is obtained from referrals)
• Learn quickly - the rules constantly change
• Creative thinking - this will come into play when you are financing a bit more creative deals...

I have to admit, the first time reading this after your post, I was confused and didnt understand a word. But now that I started doing some actual work at the office I'm starting to get the drift now, and came back to this thread at 5 in the morning to re-read it.

I'm actually a bit more curious about the real estate license theory. At the office I work at, you actually receive a little more commission given that you have a real estate license. Now I may not be that experienced to know when and where a real estate license might come in handy, so if you can point out and example that would help clarify it a lot, as well as how it could be worse.

:thumbsup:

Hopefully the reason that you had difficulty understanding wasn't because it was poorly written :D

Again, I lend primarily in Wisconsin, so the rules may be a bit different wherever you are.

However, the reason I personally don't have a real estate license is because (first and foremost) there is no advantage as far as a higher commission. Secondly, you are able to be held responsible for many additional things - especially things that you have no control over.

If you have a real estate license in Wisconsin and are a Broker, you are required to check every real estate document you come in contact with regarding your deals. If there is an error, you can be held liable because you are licensed, even though you didn't draw it up or have a say in any of the terms. Because you are a licensed in real estate, you are responsible for double-checking all the documents to make sure they are correct. Obviously, you are going to want to do this anyway as the loan officer, but as long as you are not licensed you can't be held responsible for any errors that may come up.

I am not sure if you are maybe a bit confused on the specific terminalogy, but I belong to the Realtors Association - but you do not need a real estate license to do so.

Hopefully that clears things up a bit. If you have any more questions, don't hesitate to ask!

I have a loan question. Just signed a home equity loan ($20k, 10 yr., 8.49%) so I can pay off my wife's credit cards (she racked them up before we were married). Anyway, the monthly payment is $247.95. If I pay $300/mo. how much will I be saving over the life of the loan (or how much time will I cut off the 10 yrs.)?

Thanks!

If I know what kind of rates I can get, is there an easy calculation (debt-load? percent of income going to pay interest?) that can tell me round-about (just a rule of thumb) how much credit I can get?

Most banks will not let you go over 40% debt-to-income. Here is the "quick and dirty" way to figure DTI:

Add up your monthly expenses and divide by your monthly gross income.

It should be noted that if you have revolving credit lines, you cannot just figure your monthly payment. The bank will figure what your maximum payment could be because you could max the line out at any time. Most banks takes your maximum credit line amount and figures 2% of that, I've seen some banks figure as high as 5%. So your maximum payment on $2,000 using the 2% rule would be $40.

Also, the bank does not figure in things such as child care, groceries, gas, or utilities. Here is an example of a typical household:

Monthly Gross Income: 2500

Mortgage: $900
Student Loan: $50
Vehicle #1: $200
Vehicle #2: $350
Visa: $40 (credit limit of $2,000 - take 2%)
Retail Credit Card (such as Home depot): $25 (again, take 2% of total credit line)

Total: $1,565

Divided by $2,500: 62.6%

Also, if you are refinancing the vehicles, then you wouldn't include those in the monthly expenses because you would be paying those off with the new loan.

Hope that was clear!

Thanks greeneyes!

The 2% number is interesting. 2% to 5% works out to a 27% to 80% annual interest rate.

27% isn't far off for a credit card -- enough to pay interest and some left over to deal with principle, and some swing-room if you are a fool and start getting penalty rates.

However, do banks pay attention to the interest rate on the debt source?

Ie, if you have a revolving line of credit at 7%, would that be factored in at 0.6% to 1% per month? (0.6% per month is a small bit bigger than 7% per year)

Is that 40% of income pre or post income tax income?

If you make payments of $300.00 per month, you'll have it paid off in about 7.5 years (90 Payments.) You'll save approximately $2636.10 in interest over the life of the loan as well.

Whenever you can afford to pay extra on any loans you have out, do so - you'll save quite a bit in interest over the life of the loan.

They typically do not take into account the interest rate on revolving lines, using the % as the minimum payment. However, different institutions have different policies. For instance, every place I have worked only uses your current debts to calculate your debt to income ratio - where some others will utilize the total amount of credit you have available to you to calculate your payments. In addition, I have always used the minimum payment reported to the credit bureau - which is usually quite a bit less than the 2% minimum.



As far as the 40% goes, we use gross income - or pre-tax.

Hope this helps :D

Okay, I have a new question. I ran into a client who wanted something in regards to his "Home equity line"...I'm pretty sure this is something everyone knows, but I'm clueless as to the mortgage lingo. What does that mean and what do you do with a "Home equity line" ?

Thanks.

"Home equity line of credit". A line of credit secured against the equity in his home.

Yep, Yakk is correct.

He meant a Home Equity line of credit (sometimes referred to in the biz as a HELOC)

Basically, it is an open line of credit secured by real estate - very similar to a credit card - except if you don't make these payments, they can take your house :D

Depending on the institution, there are a variety of different ways that Helocs work. Most come with checkbooks - when the check is written out, it will simply be added to your loan balance, and now many companies are coming out with credit cards that you can use.

Payments are calculated similarly to credit cards as well, with a minimum payment of $X (normally $50.00) or a percentage of the balance (normally 2%)

Hope this helps :thumbsup:

Ok, so I think I get this. It's pretty much a credit card, but instead the amount you take out just adds on top of your home value/equity?

I do have another question.
In this case I have a client who is doing a refi with another company, which we will call company A. He did the docs, got approved and all that and the title company recorded the refi. Now what if he changes his mind? Say, he decides its just not what he wants and he wants to pull out? I know that there is a 3-day grace period where you can retract, but I also hear that as long as you did not receive the money in your account (he also took cash out) you can still fax in a cancellation letter.

Now say, it has funded, and everything went through. Is there still a way to undue the loan? What consequences would there be, or what would be the simpplest, fastest way to undue the process?

Reason I'm asking is because one of my clients is in this situation and company A provided him with a good faith estimate for a 30 year fixed rate, but at the end they were only able to give him a 2-year arm. At that moment they convinced him that it was the only option he had so he signed. But now that company B is able to provide him with the plan he originally wanted, a 30-year fixed, what can he do to switch? Since company A already funded and it has been more than 3 days?

Close! Money taken out of a HELOC (Home Equity Line of Credit) subtracts from your home equity, it doesn't add to it. =)

Money taken out of a HELOC adds to your home debt.

Situation 1:
Morgage: 100,000$ @ PRIME - 1%
House value: 300,000$
HELOC max: 100,000$ @ PRIME -0.5%
HELOC current balance: 0$

Home Equity:
200,000$
Home Debt:
100,000$

Situation 2:
Morgage: 100,000$ @ PRIME - 1%
House value: 300,000$
HELOC max: 100,000$ @ PRIME -0.5%
HELOC current balance: 50,000$

Home Equity:
150,000$
Home Debt:
150,000$

A HELOC is sort of like a morgage that you can take money out of.

The advantage of a HELOC is that you don't pay money on money you don't need.

The disadvantage of a HELOC, outside of the usual dangers of credit, is that it eats into your house's equity, and the debt is guaranteed against your house.

But, really, if you have no plans to go bankrupt (depending on juristiction), and have debt and house equity, rolling the debt into a HELOC is often a good idea. It is better to have low-interest debt than high-interest debt.

I think you have it, but I think the terms are a bit off. It's pretty much a credit card, but it utilizes equity in your home as collateral. The amount you take out actually reduces the amount of equity you have in your home, as you have more borrowed against it. Does that make sense?

Federal Law mandates that (with few exceptions) refinances are required to have a three day grace period called a recision period. In essence, the borrower has up until midnight on the third business day after the loan closes to cancel the loan. If it isn't cancelled by that point, the loan goes through. Unfortunately, since the three days have passed without the borrower recinding, he's out of luck, whether or not the money is in his account.

Fortunately, you can still refinance, although the broker who just did the loan isn't going to be happy. Due to RESPA regulations, the broker should have had to redisclose the change in the terms of the loan, as well as had a new application signed. So either the borrower didn't really pay attention to what he was signing or the broker is out of compliance.

One thing you would want to make sure with the customer is that it is beneficial for him to refinance so quickly. Two year arms are usually used in B/C Lending (at least in Wisconsin) so it may be beneficial for him to improve his credit before refinancing, and hopfully get into a conforming loan program. If that isn't the case or there was some other reason for him to go on the ARM, find out what the borrowers intentions are. If he is only planning on living in the home for a couple more years, it may not be in his best interest to go on a 30 year fixed. If he isn't sure what is going to happen, it may be better for him to have the security of a long term fixed loan.

One advantage you have over the other lender, though, is the fact that you are going to be dealing with a rate/term refinance rather than a cash out loan. The programs are usually a bit better and he'll likely qualify for a better rate as a rate term, not to mention paying less in fees.

I'd suggest working out a cost/benefit analysis for the borrower, and show them exactly what it is going to cost them to refinance, how much they'll save over the long run, and approximate the time frame for them to break even with the closing costs. (For example, say he is going to end up paying $2000.00 in closing costs, and is saving approximately $80.00 a month on average over the life of the loan. If he sells the property before 25 months are up, it would have been better for him to keep his current mortgage. If he stays there longer, it will be beneficial for him to pay the costs now and refinance, the longer he stays there, the more he will have saved.

******

Although I am no expert, if he isn't B/C, you may want to wait a few weeks before you lock the rate. It looks like there is a small squeeze on the 2-10 year bonds, which should cause rates to dip temporarily. I would imagine we might see that dip in late August or Early September.

Good luck, if you have any more questions, let me know!

Thanks, that was very detailed. What do you mean by "b/c"?

B/C is just another Tier of Mortage lending. There are Four Main Categories -

Conforming - Purchaseable by Fannie Mae or Freddie Mac - most large servicers specialize mostly in these loans. ABN-AMRO, Chase, Countrywide, are all examples of these lenders.

Portfolio - These loans are specifically held by the institution that lends the funds. The advantage of portfolio products is that often they allow for specific expections to be made - often considered "niche" products.

B/C - B/C Loans are typically for poor/no credit, but can also be used in specific circumstances where someone would qualify for a conforming loan, but for whatever reason B/C may suit them better. An example would be a 100% loan with no private mortage insurance. B/C loans typically take all the rules of conforming loans and turn them upside down - in exchange for higher rates or poorer terms.

Government - These loans (while there are exceptions) are typically used when someone wouldn't qualify for anything else. The most common government loans are WHEDA, VA, and FHA. These are the most regulated loans in the industry, and must adhere to more specific guidelines than the others. An example is handrailings - if a home does not have a handrailing in ANY area there is more than one step, it is not able to be used in conjunction with a FHA (Federal Housing Act) Loan.

Hopefully that clears things up a bit :D