What You Need To Know About Adjustable Rate Mortgages (Arm) – Loan Modification Help Center

Everyday we read about the worldwide financial crisis and, specifically, about the U.S. banking and housing crisis.  To understand the challenges facing borrowers during the Housing crisis, it is critical to understand adjustable rate mortgages – how they work and how they can impact you. 

ARMs offer both advantages and disadvantages. Unlike a fixed-rate mortgage, an ARM provides interest rates that change periodically – and payments that go up or down accordingly.  At first, lenders generally charge lower interest rates for ARMs and this makes an ARM easier to afford initially.  If interest rates remain steady or move lower, this can work to your long term advantage. It is important, however, to weigh the risk that if interest rates increase in the future, so will your monthly payments. 

The initial rate and payment on an ARM will remain in effect for a limited period–ranging from several months to 5 years or more. After this initial period, the interest rate and monthly payment may change at regular intervals – every month, every year, every 3 years.   This period between rate changes is called the adjustment period.

The interest rate on an ARM is determined by two things: the index and the margin. The index is usually a standard measure of interest rates and the margin is an extra amount that the lender adds. If the index rate goes up, so does your interest rate and monthly payment.  On the other hand, if the index rate goes down, your monthly payment may go down. Not all ARMs adjust downward, however so be sure to read the details about any loan you are considering. 

Lenders base ARM rates on a variety of indexes. You should ask what index will be used for your ARM, how it has fluctuated in the past, and where it is published.    Read more...

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5 Easy Tricks That Will Help Fix Credit

Let’s debunk the myth about bad credit.A lot of people think that fixing your credit score is a question of time, changing lifestyle, sticking to a tight budget and eventually paying off your debt in full. This formula works in most of the cases. But in reality there are far easier and faster ways to raise credit score. Simple credit tricks can help fix credit and boost credit score with more than a hundred points within a few months.
A smart approach to fixing credit includes:
1 Paying off late payments first. Nothing affects your credit more adversely than past due and late payments. That’s why they should be your priority when trying to fix credit.
2 Managing your level of debt and transferring balance when necessary. Let’s say you have two credit cards with 2,000 $ limit each. The balance on one of your cards is 0 $ and the other one is 1200 $. Such balance will work against your credit score. Ideally credit balance should be kept below 30% of your credit limit. In this case this is less that 600 $ on each card. What you should do is transfer 600 $ to the card with 0 balance, so this way both cards have balances that fall below the dangerous zone.
3 Do not close old credit cards. The length of credit history is important when credit bureaus determine your credit score. Closing old cards that you are no longer using could result in “erasing” a part of your credit history. Less credit history means less credibility according to credit report bureaus.
4 Paying off collections in full may not help your credit score. It is a paradox, but it can actually lower your credit score. When payment is made on a collection account, collection agencies update credit bureaus to reflect the account status as “paid collection”. In order to clear the collections altogether from your record, you have to call the collection agency prior to making payments and explain that you will pay off your debt only if they withdraw the collection from the credit bureau reports
5 Take a good look at your credit report. If there are any errors or inaccurate information, dispute them immediately
These are just a few credit tips that can help fix credit and raise score fast. Of course there are many other tricks and well kept credit secrets that can produce amazing results in no time  Read more...

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Is The Housing Bailout For You? – Loan Modification Help Center

The new housing plan announced by President Obama last week has two main parts.  First, there is a $75 billion loan modification plan and, second, there is a program that helps borrowers who are not in danger of defaulting refinance their mortgage.  

These are some of the key questions to ask to determine if you can benefit from the plan:

Do I have to fall behind on my loan payments to be eligible for a loan modification?
No.  Borrowers must simply demonstrate that they are in danger of falling behind on their mortgage and that they don’t have sufficient income to make future mortgage payments.  Borrowers with ballooning mortgage payments or interest rates that are resetting may benefit from the new plan.

What are the loan modification requirements?
To be eligible for modification under the plan, the loan must be a first mortgage on the borrower’s primary residence.  Borrowers must currently be paying more than 31% of their monthly gross income toward mortgage payments. Jumbo loans that exceed Fannie or Freddie loan limits are not eligible. Ultimately, your eligibility will be determined by your mortgage lender.

What if I am “under water” and my mortgage is more than the value of my property?

As long as the amount owed on a first mortgage does not exceed 105% of the home’s current value, borrowers with limited equity can refinance into a 30-year or 15-year fixed-rate mortgage.  This refinance option is open to only to borrowers with conforming loans that are owned or guaranteed by Fannie Mae or Freddie Mac.  Borrowers must show that they are current on mortgage payments and that they will be able to meet the new mortgage payments.  Read more...

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Commercial Finance Funding Help And Working Capital Advice

There have been some disappointing and unexpected actions taken by commercial lenders in response to recent financial events. This changing environment for business finance funding is likely to produce several new problems for commercial borrowers. To assist small business owners in their efforts to keep up with these imposing challenges, The Working Capital Journal is one of several commercial financing information resources which should be reviewed regularly. The working capital finance industry has primarily been operating on a regional and local basis for many years. In response to cost-cutting that has permeated many industries, there has been a consolidation that has resulted in fewer effective commercial lenders throughout the United States. Most business owners have been understandably confused about what this might mean for the future of their commercial financing efforts, especially because this has happened in a relatively short period of time. Of course, for some time there have been ongoing complex problems for commercial borrowers to avoid when seeking commercial loans. But what has produced a new set of business finance funding problems is that we appear to be entering a period which will be characterized by even more uncertainties in the economy. Previous rules and standards for commercial financing and working capital finance are likely to increasingly change quickly, with little advance notice by business lenders. Business owners should make an extended effort to understand what is happening and what to do about it due to this realization that substantial changes are likely throughout the United States in the near future for commercial finance funding. At the forefront of these efforts should be a review of what actions commercial lenders have already taken in recent months. The Working Capital Journal is one prominent example of a free public resource that will facilitate a better understanding of the responses by business lenders to recent economic circumstances. By publicizing actions taken by commercial lenders, this will contribute to these two goals, both of which are likely to be helpful to typical business owners: (1) To highlight controversial bank-lender tactics with a view toward reducing or eliminating questionable lending practices. (2) To help business owners prepare for commercial finance funding changes. Sources that currently include The Working Capital Journal are actively encouraging business owners to describe and report their financing experiences so that they can be shared with a broader audience to assist in this effort. Some of the most significant commercial financing changes reported so far by commercial borrowers involve working capital loans, commercial construction financing and credit card financing. A notable situation of concern is that predatory lending practices by credit card issuers have been reported by many business owners. Some specific businesses such as restaurants are having an especially difficult time in surviving recently because they have been excluded from obtaining any new business financing by many banks. One of the few recent bright spots in business finance funding, as noted in The Working Capital Journal, has been the continuing ability of business owners to obtain working capital quickly by business cash advance programs. For most businesses accepting credit cards, this commercial financing approach should be actively considered. Business cash advances are literally saving the day for many small business owners because most banks appear to be doing a terrible job of providing commercial loans and other working capital finance help in the midst of recent financial and economic uncertainties. For example, as noted above, restaurants are virtually unable to currently obtain commercial finance funding from most banks. However, if a restaurant accepts credit cards in their business operations, they are likely to be able to obtain needed cash from merchant cash advances and credit card factoring.

Tags: Advice, Capital, Commercial, Finance, Funding, Help, Working