More Questions for Mortgage Applicants

It is normal that lenders would require financial statements and paid bill receipts from their clients who would want to avail a loan, however nowadays; these institutions are requiring more than just financial information.

According to Frank Donnelly, the current president of the Mortgage Bankers Association of Metropolitan Washington, there was a recent case of abnormality in one of their borrower’s bank account;the woman had to explain a deposit of $200 in her account. She explained that the money belonged to her ex-husband that she has been raising a child with.

The loaning party required for a copy of her divorce papers even if she and her ex-husband have been separated for 17 years. Borrowers who have been processing for long term loans know how closely these institutions are watching their clients’ ability to payback their mortgages.

Lenders are taking strict measures because they want to prevent buying back loans if the loan fails. Customers will have to face tougher security and submit more supporting papers to answer the questions of the consumers.

For some these procedures that lenders are taking are too much, but for a lender’s point of view, they are trying to save themselves from the casualties incase all-else fails. Not only are they afraid of buy backs or failure on the loans, the Consumer Financial Protection Bureau, the government agency in chargeto investigate these institutions are very critical and strict in their guard against rule breakers.

But Stella Adams, a fair-housing advocate in North Carolina, said lenders are going too far. She said banks should use “solid, old-fashioned underwriting,” such as the guidelines used before the housing boom. Right now, lenders are making it too difficult for people to get financing, she said.

But Christie Alderman, a vice president of a loaning industry defends their side from scrutiny. According to her, the system they are imposing is their way to defend themselves from scams and deceit from consumers.

7 Errors That Your Credit Card Company Wants You to Make

You are planning for vacation and so you started saving airline credit miles for that. Finally, you have accumulated enough miles and made flight reservation for the trip. But you were surprised to find out that your airline credit miles are no longer valid because they have expired. This mistake was even committed by no less than John Ulzheimer, the president of consumer education for SmartCredit.com.

The bank won’t give much attention to these mistakes.

Credit card issuers do not bother about this common mistake regarding expiration of credit miles. John Ulzheimer has learned his lesson. He suggested that consumers must read carefully the fine print of the rewards credit card they have selected to avoid the embarrassing situation. They should clearly understand the rules of redemption.

* Pay monthly minimum only. The consumers should pay more than the monthly minimum in order to reduce the interest paid on the credit balance.

* Delay your payment now and then. According to John Ulzheimer, the credit card companies want you to pay your account and they won’t mind if at times your payment is delayed. Don’t be misled by this. Under the Credit CARD Act of 2009 the companies cannot raise interest on your balance for payments that are delayed for 30 days. But if you have received a 45-day notice, they can raise the interest and charge you fee for late payment which ranges from $29 to$39. You can imagine how much these late fees of $29 to $39 could benefit the card companies.

* Don’t mind the mail. You are too preoccupied with so many things that you don’t mind your monthly credit card statement. Statement must be checked once you receive it so that you will immediately know if there are erroneous charges and to avoid paying late fee and higher interest due to 45 day notice.

* Balance transfer to rack up a new debt. Outstanding balance is transferred to a card that charges low or zero introductory interest thinking that through this move, you can save money. According to Cunningham, if you decide for balance transfer, the move should be to pay off debt and not to increase it. He further said that the balance should be paid before the end of the promotional period otherwise the move to transfer the balance would be useless. The balance transfer fee must also be accounted.

* Choose to go over your credit limit. They say that under the new law if you don’t go for buying over the limit, the transaction could be denied and can cause you embarrassment. But Ulzheimer said that if you go over your limit, it can cost you higher interest on your balances and pay an over-limit fee.

* Paying more fees than the rewards earned. It is not practical to sign up for an airline credit card if you do not travel, Cunningham said. You pay $129 annual fee and only earn reward points equivalent to $80 cash. Ulzheimer said that this is like self funding your own rewards program. Therefore it is wiser to get a card with no reward points and no annual fee is required. Ulheimer further said that if your payment in getting a card with a reward points is beyond the promotional interest period the interest due will eat up the earned points. Choose the rewards credit card game after clearly understanding the rules of the game.

More Bad News for JPMorgan

JPMorgan Chase is in for more bad news as their credit continues to decrease these past few days. Fitch Ratings gave a lower rating of A+ to the financial agency after they lost $2 billion worth of dollars earlier last week.

According to Jamie Dimon the Chief Executive of JPMorgan, the company’s situation could get worse because they are not liquid enough and ratings companies are asking questions about their company’s risk management status, framework and practice.

The ratings industry head, says that JPMorgan Chase’s reputational and risk governance issues are not as good as they used to be however the current amount that the company is losing can be managed. According to reports JPMorgan’s, last week’s market shares was at $36.96, it went down by 9.3%, then after just a few hours it plunged further down to 0.8%  that’s $36.67.

The bank continues to be criticized and ridiculed by politicians and lawmakers as the ratio continues to drop. Thus a more convenient way for the firm is to have tighter measures and adapt to something like the Volcker Rule which can take care of too much risk-taking done by large banks.

The bank’s Executive Chief Mr.Dimon who has been getting positive regards about his efforts to get the bank back in tact has been open about his thoughts in implementing laws and regulations especially the Volcker Rule.

This however stirs questions from external sources whether the company has tried to implement the regulation in the past. However the total loss of $2 billion that was reported last week has weakened the arguments of the bank for their new measures. Bank investors are currently having difficulties in getting access to financial institutions and international trade and businesses.  Though JPMorgan Chase like the Bank of America and Citigroup have reports that can still be further evaluated, their unseen transactions and unclear records for their strategies could be destructive for them.

The Effect of Your Spouse’s Bad Credit in Buying a Home  

After getting married with a spouse having a bad credit, does it stop you from buying a house with your good credit record? The answer is “no” because your plan to buy a home you want is still very possible or within your reach. Before you castigate your spouse for ruining his credit, take note that after the severe financial crisis in 2008 only few Americans were greatly affected by the credit crunch. In fact, many American families are uncertain about their financial situations. In other words you are not alone in such kind of situation.

Tips to buy a house with Bad Credit

It is not only you and your spouse who are struggling to buy a house because of bad credit. Here are some options you can choose from when your spouse’s credit is not desirable.

1. Buy the house together: If you buy it together, you can set aside the bad credit of your spouse. This is an option which will charge you high interest rate and no financial expert would advise anyone to choose this option but this is just one way for you to buy a house.

2. Buy it alone: If your spouse’s credit is bad but yours is good then buy it using your own credit. This will be easier for you to get a loan because of your good credit record. The amount of loan will be based on your income and available cash.

3. Loan granted with no verification of income: This is an option where the single income of the one who has a good credit record or the bad credit record of the participating spouse are not the basis for granting the loan. This type of loan, however, requires a large down payment ranging from 25 to 30 percent of the principal. The bad news is this option eliminated because of the financial collapse.

4. Replacement of “Bad” Credit with “Good” Credit: A third party can help a couple to buy a house. Usually one of the parents with excellent credit rating can replace the spouse with a bad credit. The third party is required to co-sign the couple’s house loan.

How to Get a Loan with Poor Credit

The majority of the public have a time in their lives that they had poor credit and those who already experienced this are aware that it is never easy to have no access to credit. Those with poor credit can still loan money but they will be charged higher interest rates because they are a risk to the lender.

However, if they manage their credit well, then their credit scores will improve. Here are some tips for those with poor credit on how to get a loan and improve their credit rating.

First, consider getting payday loans, which are short-term loans that are created according to your capacity to pay off the loan. When getting a payday loan, your credit report is not checked. Moreover, a payday loan does not have an effect on your credit score, except when you do not completely pay off the loan.

A payday loan is ideal when cash is needed immediately for unforeseen happenings. You need a regular source of income and checking account as well.

Second, seek the help of a broker, especially when you are planning to apply for a mortgage or home improvement loan and you have poor credit. There are some brokers who have a certain connection with several lenders and banks, so they can assist borrowers with either good or poor credit history in getting loans appropriate to their needs. In addition, brokers are able to offer assistance to those people with poor credit since they know the credit terms of a lot of lenders.

Third, consider a cosigner, especially someone who has good credit, for instance, a family member, a friend, or an acquaintance. If you fail to pay the loan, the cosigner has the responsibility to pay your loan instead. Also, once you become a borrower with a cosigner, and pay the loan on time, then your credit score will improve.