The following is a brief overview of each mortgage loan and how they work.

• PMI. Private mortgage Insurance loans require a lower down payment, but recoup the lender’s risk with a premium insurance payment. This type of loan can be generated with less than 20 % down for qualified buyers

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• ARMs. The adjustable rate mortgage is based on an index for short term loans and a margin limited by an interest rate and payment cap which causes the buyer’s monthly payment to fluctuate, or adjust, to the loan amortization. The ARM may be set for 2 to 5 years before it adjusts.
• Bi-Weekly Mortgages. This plan allows the buyer to make payments every 2 weeks to bring down the total amount of interest attached to the loan.
• GPM. The Graduated Payment Mortgage allows the buyer to receive a competitive initial interest rate with the payments to increase accordingly to a fixed rate within a specified amount of time.
• FHA. In cooperation with the Department of Housing and Urban development, (HUD) and the Federal Housing Administration, (FHA), a first time buyer may purchase a property with 2 to 5 % of the purchase price as down payment. The HUD and FHA loans are not lenders, but, rather guarantors of the loan should the buyer default. However, due to the minimal down payment, the buyer must buy an MIP, (mortgage insurance premium).

The adjustable loan offers the best interest rate at the time of signing, in accordance with the client’s credit score. However, in an unstable economy, those low rates may jump to double their value plunging the home owner into a foreclosure situation.

Talk to your real estate professional about the terms for a 30 to 40 year fixed loan. These loans are often higher monthly payments than the adjustable mortgage, but the safety precaution is that you will always know what your payments will be. ]]> http://www.financenet.org/us-mortgage-guide/feed/ 0 http://www.financenet.org/credit-cards/ http://www.financenet.org/credit-cards/#comments Wed, 24 Jun 2009 14:10:00 +0000 admin http://www.financenet.org/?p=26 Credit cards allow cardholders to access a line of credit at will for purchases and cash advances. The limit on the line of credit is established by the credit grantor and is based on a number of factors that determine the cardholder’s creditworthiness, or ability to pay back the loan.

The main credit card issuers are Visa, MasterCard and Amex.

Credit cards are the actual payment instrument used by a cardholder in a retail or online establishment to purchase goods or services that allow them the option to pay in full at a later date, usually a maximum of 59 days credit before any interest payments are due.

For providing credit, card issuing banks and institutions are paid a fee, in the form of interest which a cardholder will pay in addition to the principle balance owed for the original purchase.

There are different types of credit cards available.

• A traditional credit card is one where purchases can be made, and then a payment is generally due on a set day every month. You can choose to pay the balance in full at the end of the billing cycle, or “revolve” the balance by paying a minimum payment and allowing the bank to charge interest on the remaining balance. This type of card that most consumers carry.
• A charge card is a card that may or may not have a limit, but payment in full in required at the end of each month. There is generally a fee charged to carry this card, since revenue is lost by not allowing cardholders to revolve their balance.
• Then there is a purchasing card. This card is a hybrid between a charge card and a credit card. The terms set up by the card issuing bank will allow the balance to be revolved, but not indefinitely. At a specified time, card aging card balances must be paid in full to avoid having the card restricted. These cards are usually used by businesses to monitor company paid charges by employees.

Having a credit card can benefit a cardholder in several ways:

• They allow purchases, especially emergency or unplanned purchases, to be made without interrupting cash flow.
• They allow flexibility in making larger purchases, making it easier to pay for goods or services that may not have been otherwise attainable.
• They allow for ease in travelling by allowing a traveller to pre-arrange hotels, flights and restaurants.
• They mean you don’t have to carry large amounts of cash to make purchases.
• They protect your purchases against fraud, as large transactions are guaranteed by the card issuers like MasterCard, hence you can claim your money back if goods or services you have paid for on your card fail to turn up.

The main difference between UK and US credit cards is their use. All three types of cards are available in both countries; however, the UK prefers to utilize charge cards, paying off balances at the end of the month, while Americans tend to revolve lines of credit, amassing debt.

They are offered in many countries, including the US, and the UK. The rules are generally the same, although there is less regulation in the UK for these types of lenders. Also, the UK lenders discourage “rollovers” that are more or less welcomed in the US.

A rollover extends the loan another period, and are discouraged, because these types of loans have hefty interest rates, and rollover practices are not beneficial to the consumer if they get “trapped” in these fast cash loans.

To apply for a payday loan, you either go into a store and fill out their application, or do it all online at a secure website lender. In most cases you need to provide or show proof of residence, identification, and employment or income, and bank account information.

Many online lenders do not do any credit checks, and neither do many stores. The fact is, you are not applying for credit when you ask for a payday loan; instead, you are creating a loan that is secured either by your written out check, or an ACH electronic withdrawal form that allows repayment directly out of your bank account when it is due.

You may be able to borrow from $100 to $1500 in the US, and from £80 to £750, or up to £1,500 in the UK. Interest is usually 15 to 30 percent on a two week loan, which is high interest of between 390 and 780 percent, or more in some cases.

In the UK, a company needs a consumer credit licence consumer credit licence, which are issued by the Office of Fair Trading (OFT), before it is allowed to offer payday loans to the public.

In the UK, early prepayment is discouraged, but in the US, at some lenders, you can eliminate the entire fee if you repay the loan within 24 hours.

We all know credit references determine our worth to banks and other financial institutions. We know those credit scores can either haunt us or they can move mountains for us. What we might not know is how the scores are calculated, what the factors are that deem us worthy (or not) and who incorporates them into their decisions. You might be surprised at what these gems can and can’t do.

It’s important to understand what factors play a role in figuring one’s credit scores. You can be sure there’s a formula that’s used and it’s been the best kept secret in the free world for as long as there have been scores. These factors include:

• Payment Histories – Do you pay creditors on time? ie) have you paid your credit card every month?
• Debt to Income – Sometimes referred to as DTI and too much debt carried can drive scores down.
• Tax Liens – Is the IRS on the lookout for you? If so, they can haunt you forever (unlike traditional banks and credit card companies).
• Child Support Arrears – Yes, if you’ve been delinquent on child support payments, there’s a good
  chance it’s noted on your credit report.

Many people mistakenly believe only those businesses who lend money are looking at your credit report. Not so! A majority of employers are now pulling credit reports to determine if an applicant is responsible. If he’s having financial problems, there’s a good chance his mind won’t be on his work. Further, many employers won’t hire someone with bankruptcies or delinquent child support payments. If you’re looking at signing a morals clause for an employer, rest assured, your credit score is factored in to whether or not you’re offered a contract.

Just as banks and mortgage companies will obtain a credit history before they agree to carry your home loan, you also stand a chance of having apartment complexes or even individuals who rent houses request credit reports. It’s not uncommon these days.

The computer formulas that calculate a credit score are only as good as the humans who key your information. Mistakes happen. If you believe any of your three credit reports contain errors, your first move is to visit the three major agencies’ websites. From there, you can request a copy of your credit report to ensure the information is accurate. If it’s not, you can easily request to have the information investigated. If it turns out the information is indeed in error, the agencies will remove it; however, if the information is accurate, there’s a good chance it will remain on your report for up to ten years.