Monthly Archives: July 2008

Calculate your income before buying a home

When a loan officer is reviewing your mortgage application, he tries to figure out how much of the mortgage amount should be approved to you according to your past and present financial situation. Before you go to the mortgage officer and apply for the loan, review your monthly income because the lender is going to count on your income through paperwork.

If you are salaried, and don’t earn incentives, you will be able to do the calculations quite easily. Get your paycheck and see the amount. If you are paid twice a month, multiply the amount by two. If you are paid bi-weekly, multiply the amount by 26 and then divide by 12.

If you are paid on an hourly basis and work for 40 hours in a week without any overtime income, then you will need to multiple your hourly rate by 40, multiply that total by 52 and then divide it by 12. You will get to know the total income in a month.

If you are earning overtime, bonuses, or commissions, then the calculations aren’t that easy. Most of the lenders will not give you any credit based on what you are earning currently. They will do an average of your total income over the last two years, and then add it to your regular salary or hourly monthly income. Or you can see the W2 forms for the last two years. Add them together and divide by 24. It will show your monthly income. This calculation will apply on those also who earn on a part time basis or are a seasonal employee.

If you are self employed or receive 1099 income, then you need to have a track record of the income of the last two years. Lenders will see the total amount that you declared to the IRS to be your income since that is documented. Many self employed show more expenses so that they can keep their income lower. Look at the Schedule C of your tax returns for the last two years and the number at the bottom that says “profit” is your annual income. You can add any depreciation to that figure. Add them together and divide by twenty-four.

These are the variations and exceptions of calculating your total income which will be done by the mortgage officer when he is reviewing your application. You can also do this calculation on your own and see the mortgage amount you qualify for.

Personal loans for people with bad credit

If you have been turned down in getting approved for a personal loan because of bad credit, you don’t need to feel disheartened. You need to have a strong determination, a proper planning and discipline to rise above the predicament. You should not blame yourself for having fallen into a bad credit situation. It can happen to anyone because of unintentional mismanagement of personal finances, or some unexpected financial crisis.

There is always a second chance and there are many lenders who are willing to offer loans to people especially with bad credit. Getting approved for a loan is not an impossible task, but you have to pay a high interest rate and attendant application processing fees and may be some hidden charges.

Search on the internet and you will find a number of high risk lenders who offer such loans. Be careful of the “fake financial companies” who will prey upon your vulnerability. They will offer you different types of loans that will sound very attractive and will charge you disproportionately in the form of high interests and other fees combined with stringent conditions.

There are many national and regional companies all through the United States that deal with such high risk loan lenders. You can contact one such agency in your area and avail the services of a high risk personal loan broker who can help you in finding a reliable lender in your area. People who have filed for bankruptcy or have poor credit scores can avail such personal loans.

  • Downside of high risk personal loans:

One should be cautious before applying for high risk personal loans because these loans come at a very high interest rate with application processing charges and many other hidden and overdraft fees on lower loan amounts. Another negative impact of taking such high risk personal loans is that they will affect your FICO scores. The FICO algorithm calculates credit scores based on the financial institutions from whom you get the loans. If you are getting loans from such high risk lenders, your scores are going to get affected. Besides, a reputed lender will not be willing to offer you any credit because of your getting loan from such high risk personal loan companies. They will think that you were not able to get approved with any reputed financial institution, that’s why you had to go to such high risk personal loan companies to get the loan and it may be also because you were not able to manage your finances properly.

  • Advantages of high risk personal loans:

No matter, these high risk personal loans have some negative effects; it is these lenders who offer you the loan amount when others have rejected to approve your loan. Moreover, the loan application process with the high risk loan companies is very simple. They are not time consuming like it happens with some reputed financial institutions. If time is an important factor, then you should consider such high risk lenders and get the required loan amount from them within minutes.

Dos and don’ts of using credit cards

Credit cards often the best ways of borrowing money when they are used properly. These cards offer a lot of flexibility and come with a lot of benefits for the cardholders. You can make the best use of your credit cards and avoid any nasty surprises in the following ways:

The best of the credit card deals comes when you know the purpose of using the credit card. Many people use their credit cards in improper ways because they don’t have control on their spending or repayment habits. Keeping a credit card is useful, but you can make the best use of the credit card when you know your current circumstances. If you know exactly how to use your credit card, you can reduce the interest rates on your cards and maximize its benefits.

Every credit card company is offering their credit card deals to the customers of all categories to stay in the competition. It is important that you choose the right credit card deal and take advantages of the options available.

  • Benefits of using your credit card:

1) If you are paying your balances in full within the due dates shown in your statement, you are actually using the balance on credit for free.

2) Credit card is a safe and convenient way of paying for goods and services, particularly if you are purchasing over the internet, phone or by mail order.

3) If you have purchased any faulty goods on your credit card, you can claim for a refund from the credit provider.

4) Companies offering the best credit card deals will offer protection against fraud. If you have been victimized by some kind of fraudulent activity on your credit card, you will not be charged by your credit card company. It is important that you report the fraudulent activity to your credit provider as soon as possible and get the card blocked.

5) You get to earn a lot of incentives from the best credit card deals in the forms of loyalty points and cash backs, or payments to support a charity.

6) Credit cards are virtually accepted in every country around the world.

When you are shopping for the best credit card deals, make sure that you have read the terms and conditions properly otherwise you will be caught out by hidden charges and fees.

  • Here are some of the risks of holding credit cards:

1) While using a credit card, careful management and willpower is very important. If you don’t have a perfect control on your spending habits, you will end up in huge debts.

2) Watch out for penalty fees. Try to pay the balances in full within the due dates otherwise you will be charged high interest rates and the financial fees.

3) Making late payment regularly can affect your credit ratings severely.

4) A lot of your money will go wasted just towards the interests and fees if you are paying just the minimums.

5) If you have outstanding balances on a number of credit cards, consolidating all the credit card debts will be a good option. This way, you will be able to manage your finances properly.