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How To Borrow $5000 When Collecting SSI or SSDI

The latest applicant lives in Henderson Nevada, does not have a job due to his disability and receives SSI benefits on a monthly basis.  As a result he is under a number of restrictions with regards to how much money he can earn as well as how much he has in terms of overall assets.  He currently volunteers at a local organization that has helped him in the past as a means of paying back this support. He is in no way obligated to repay the support he received, but feels that morally that this is a good thing to do. He also receives support from the group and enjoys the social side of getting out and helping people.

He would like to borrow some money, $5000 when collecting SSI to pay for some improvements that he would like to make in his apartment to improve his overall quality of life. He does need to be careful that this loan is not perceived as income to avoid jeopardizing his income benefit. There are several comments that we need to make with regards to this loan application.

This potential borrower, although he has a steady income does not meet the criteria for a loan due to his income level. As a result it is unlikely that he would be approved for a loan. This is unfortunate for him, since the improvements he is interested in would certainly make his life easier.  Even with a low interest rate loan that is spread over a five year term, the monthly payment will be too high for someone with his income level.

He may be able to secure some or all of the support he needs in terms of improvements by appealing to local business or other agencies in the community where he lives. With the right contacts it is possible to gain assistance for improvements in terms of free equipment and labor to accomplish what he is looking for.


How to Recover From a Really Bad Credit Rating

The latest person to write into our web site has gotten himself into a really difficult situation from a credit rating perspective. Basically he has been turned down by all lenders due to his bad credit rating and frankly we do not think that any of our lenders would entertain a loan to him. He has asked about how to recover from a really bad credit rating and we will cover some of things he can do to get started in this direction.

The bottom line is make sure that you meet each and every monthly payment on time.  There are three  items to consider right away. First check your credit report to ensure that it is accurate. There may be some items that are not correct and you need to dispute them. Secondly, set up monthly payment reminders so that you never miss another payment. Make your payments a few days early to ensure that they are never late even by one day. Third, begin focusing on the debt that you owe and pay off the debt that is carrying the highest interest first. Once you pay off this debt, you will have more spare cash to focus on the other debt that you owe. There is no easy answer on how to recover from a really bad credit rating, but focusing on meeting your obligations on time will go a long way to improving your rating. It can take as long as 7 years to remove debt items from your credit rating so be patient on that front.

If you are having difficulty meeting monthly payments because of high interest debt, you may want to see a debt counselor. He or she may recommend a consolidation loan to consolidate all of your debt into one monthly payment that is carrying a lower interest rate. This step alone can save you hundreds or thousands of dollars depending on the size of your debt and how long it takes to repay your debt.

Stay away from pay day loans and other short term loans. These carry high interest rates, even higher than credit cards along with fees. They are very expensive and will use income that could be used for paying down your debt.

Focus on repaying your highest interest rate credit cards as well. Some carry interest rates at 30% while many are around 20%. At these rates making the minimum monthly payment will take you years to repay the balance on your credit card. Take out a low interest consolidation loan or fully pay the balance as quickly as you can to avoid high interest rate charges.

If you have a lot of credit cards, you may want to consider closing some of them. Although it will take a long time for this step to be reflected on your credit rating, it will make a difference in the long run. It shows that you are taking the issue seriously. Be patient and stay focused on the end game which is to improve your overall credit rating.


How to Get Approved For a $10,000 Personal Loan

Establishing a good credit line can be difficult for people just entering the work force like our latest client. He is working as a waiter at a well known restaurant, making good tips and setting up his new apartment. He does not have a lot of expenses or debt such as a car loan or other loans. Having recently moved into his apartment and recently started a job he has little in the way of a credit rating. He had to purchase just about everything he needed on credit and now wants to be approved for a $10,000 personal loan so that he can pay off the credit and focus on the personal loan. He will pay much less interest as a result and be able to repay this small debt more quickly.

His only mistake was to spend the money before applying for a personal loan. Obtaining a personal loan under these circumstances can be difficult sometimes when just starting out due to lack of history of any kind in terms of paying rent on time, paying car loans on time, paying utility bills on time and paying for any debt on time. He is considered a higher risk just because he does not have the credit rating history to show that he is dependable and is a good credit risk.

This consumer has several options to consider. He can just focus on repaying the credit card debt as quickly as possible putting everything he has in terms of cash towards it. Yes he will pay more interest, but it is the easiest option if he cannot get approved for a personal loan.

He can also apply for a higher interest personal loan. It will still be lower than his credit card and he will pay less interest. He really should focus on repaying this loan as quickly as possible as well to reduce the overall interest that he pays.

Finally he can ask someone, maybe his parents to cosign on the loan so that he is able to obtain a low interest loan. It does mean that his cosigner takes on the risk of having to pay the loan if he defaults. He will pay less interest as a result and should work hard to repay this loan as quickly as possible.


What To Check Out Before Getting A Subprime Loan

The latest applicant needs a new mortgage of $250,000 and needs approval quickly so that he and his wife can remove one condition on an offer they have on a home they would like to purchase. They are being offered subprime mortgages by other lenders and are wondering what to check out before getting a subprime loan?

A subprime loan is typically a loan that is offered to borrowers that have less than perfect credit ratings. The subprime loan interest rate can be from 1% to as much as 10% above the current prime lending rate, which can be a substantial difference in terms of both the amount of interest paid and the monthly payments. In the chart at the bottom of this post we have shown the total interest paid and the monthly payments for a mortgage close to prime, at 5% and also at 11% which would be indicative of interest rates for subprime loans at the time of writing this post.  The difference between a mortgage at 3% and one at 11% for a 30 year mortgage is an increase in the monthly payment by over $900 a month and over $300,000 in total interest payments over the life of the mortgage. This is a substantial amount.

The other major difference from regular loans is how often over the life of the mortgage that the interest rate can change. Clients could be looking at significant interest rate increases in the future since interest rates are at the lowest levels in years and are forecasted to increase.

This client will need to consider very carefully which type of mortgage he takes since the financial cost can be significant.


Tips For Borrowers Applying For An Unsecured Personal Loan

The latest applicant is looking for tips for borrowers applying for an unsecured loan. They live in Fresno California and would like to borrow $30000 using an unsecured loan to consolidate credit card debt and some other small debts that they have. They have a good credit rating, good jobs with decent income and their home is almost paid off. They appear to be excellent candidates for an unsecured loan.  As part of their application they have asked for some tips which we will cover in the following paragraphs. There are 9 areas in total that consumers should pay attention to when looking for unsecured loans.

Check your credit rating – know what your rating is before you apply to make sure that you are even eligible for low interest loans.

Check beyond the headline interest rated posted – if the bank is advertising an interest rate, this will be the headline rate. Many consumers will be eligible for even lower rates and they should ask if this is the best rate available.

Check the competition – shop around for the best deal. Be careful to not overdue it since each time your credit rating is checked, it will be registered and could impact your rating. Never the less you want to find the lowest rate.

Check for Alternatives to loans – would a 0% credit card work, what about your savings and can you delay the purchase until you have sufficient money saved for the purchase.

Anything but Payday Loans – payday loans are notoriously expensive in terms of fees and interest rates. Avoid payday loans and reduce your cost.

Does Loyalty Pay – always check with the bank you deal with, but do not stop there. You may be surprised that a competitor will offer a better rate to obtain your business.

What is the Term of the Loan – A longer term means you pay more interest overall and you also have a lower monthly payment. If you can, take a shorter term, pay less interest and pay off the loan more quickly.

Can you Fix Your Rate – a variable loan rate can mean increased interest costs if interest rates rise. Fix your interest rate for the term of the loan to manage your costs.

Avoid Payment Protection Insurance – or at least shop around for a lower cost PPI if you feel that you really need it.


Getting Approved For a Loan If You Don’t Have Assets For Collateral

We find that there are consumers that come from all walks of life and have a variety of problems obtaining loans and mortgages. Our current applicant has a good credit rating, a relatively secure job (as much as any job can be secure these days), and he has skills that are transferable from employer to employer. He owns his own home and car. The car is paid for, but unfortunately it is an older model and not worth too much and therefore cannot be used for collateral for a loan.

He has a mortgage on his home. He does not have sufficient equity in the home to use as collateral either and therefore is faced with interest rates that are based on unsecured loan rates.  The loan is to cover some credit card debt for the total amount of $10,000. He does not have enough equity and will need to pay slightly higher interest rates, however these rates are substantially lower than what he would pay if he were to leave the debt on his credit card. The rates are at least 10 points higher and cost a great deal more on a monthly basis.

This situation is actually pretty common with many consumers not having the equity to use as collateral for loans that they wish to be approved for. For consumers that do have collateral, this means they can obtain lower interest rates in return for placing this collateral with the lender or signing it over to the lender. What this situation really means is that if the borrower for some reason cannot repay the loan, or does not repay the loan, the lender can sell the collateral to recover the remaining balance of the loan plus the cost of processing and selling the collateral. Before you offer collateral, consumers should always be sure that they can repay the loan based on the terms of the loan without ever defaulting on the loan.

We believe that this client can meet all of the obligations of this loan and will likely be approved for a loan, however the interest rate may be higher than he would like.


Tips For Staying On A Monthly Budget

Our newest applicants are on the right track in terms of managing their money and making sure they do not get themselves into a financial bind by spending more than they have on a home. They are looking for tips on staying on a monthly budget. The first step is to arrange for a mortgage with the largest down payment they can afford and the lowest interest rate they can find. This will help to ensure that their mortgage payments are as low as possible.

They have a good credit rating and should qualify for a relatively low interest rate mortgage for as long a term as they wish. They have taken the right steps by building up a large down payment. Even though they have lived with his wife’s parents for a year, this has allowed him to build up a large down payment, which is the first step in managing a monthly budget.

We also urge these applicants to estimate their monthly taxes and the utilities that will need to be paid. Adding up all of these figures will provide an estimate of the total monthly cost for their home including principle, interest, taxes, utility costs and maintenance costs.

The big unknown is what repairs will be required once they take possession of the home. We urge then and in fact it is required in many states to have a home inspection before they finalize the purchase. This inspection is extremely important to establish what repairs will be needed on the home. Since this is a foreclosure sale, the bank will not make any repairs. The best the customer can do is to negotiate the price down further to cover any identified repairs that may be needed.

We anticipate further discussion on this file since the sale of the home is no where near being finalized at this stage.