Bad Credit Refinance

If you are living in your home for a long period of time or if you have sufficient equity in your home you may be able to do a bad credit refinance. People who purchased a home some time ago may be paying a very high interest rate causing their monthly mortgage payments to be very high. By opting for a bad credit refinance they they can avail of today’s low interest rates and in the process lower their monthly mortgage payment considerably, freeing up scarce cash to meet other obligations like car payments or credit card bills.

If your credit is bad the lender doing the bad credit refinance will require that the borrower has sufficient equity in the home or has some cash to bring to the table. Typically a bad credit refinance will be for a minimum of 80% of the homes market value and in some cases the lender will only loan 60% to 70% of the homes appraised market value.

Bad Credit Refinance Rates

Unfortunately because of the perceived risk in lending to a borrower with bad credit the interest rate available for a bad credit refinance will be higher than those quoted in the national media. If the borrower has cash available they can buy down the rate by paying some points up front. A point is 1% of the mortgage amount. If you have an adjustable rate mortgage that is about to jump it may be worthwhile considering bringing money to the closing table if it allows you to get into a low rate fixed mortgage.

Bad Credit Refinance Equity

If you have a large equity position in the home is will be possible to refinance into a lower rate simply because the loan ammount to be advanced may be only 50% to 60% of the appraised value of the home. In some cases it will be possible to do a bad credit refinance and walk away form the closing with a substantial amount of cash. This is called a cash out refinance.

There is also a produce called a bad credit home equity loan that is available for borrowers with bad credit who have a large equity position in their home. Basically the lender would either take out a second mortgage for the amount being borrowed or pay off the sitting first mortgage and place a new first mortgage on the property for the outstanding balance of the paid off first mortgage plus the equity amount being borrowed.

What is Equity

Equity simply put is the difference between what you owe on your home and the current market value of your home:

• Appraised current market value of home = $250,000.00
• Total outstanding debt secured by home = $150,000.00
• Equity you hold in your home =                       $100,000.00

How much Can I Borrow

Typically a bad credit refinance or bad credit equity loan will be for 70% of thecurrent appraised market value of the home.

This applies to a bad credit equity loan:

• Appraised current market value of home = $250,000.00
• Maximum loan available at 70% LVA       = $175,000.00
• Current outstanding secured by home     = $150,000.00
• Maximum Equity Loan available                  = $ 25,000.00

This applies to a bad credit refinance:

Appraised current market value of home = $250,000.00

Maximum loan available at 70% LVA       = $175,000.00

Current outstanding secured by home     = $150,000.00

In this scenario the borrower could either simply refinance into a lower rate by taking out a $150,000.00 bad credit refinance mortgage or the borrower could take out a $175,000.00 bad credit refinance mortgage and get a lower rate plus walk home with a check for $25,000.00

Your Home is At Risk

While is is a good thing to lower your rate or even get your hands on some much needed cash it is imperative that you understand that a mortgage is a security instrument securing a home loan note. If you fail to honor the terms of the note the mortgage gives the lender the absolute right to foreclose on your home and evict you from it.

Free Credit Report

If you have been turned down for credit in the past because your credit score is low it is a really god idea to get a free credit report to find out just why your credit score is so low. There are a number of ways to get a free credit report without the need to pay any money or give any credit card details.

If you have made a credit application and it has been turned down for credit reasons you are entitled by law to a free copy of the credit report showing the reasons for your credit application denial.

Also everyone by law is entitled to a free credit report from each of the three major credit reporting agencies every year. To get your free credit report from each of the three major credit reporting bureaus go to “annual credit report dot com” and follow the easy steps. You will not receive your credit score as this service has a fee but you will receive online a free credit report from each of the three major bureaus, Equifax, Experian and Trans Union.

Free Credit Report Negative Enteries-Errors

When you download your free credit report you should carefully examine each one for negative entries. These are the information in your credit report that are responsible for your low credit score and you inability to get loans.

When you find a negative entry examine it to see if it is genuine. Credit fraud and identity theft is a common occurrence and there is always the possibility that you are a victim so go through your free credit report with a fine tooth comb to find errors.

If you do find errors contact the credit reporting agency immediately both electronically and by mail. Always keep a copy of correspondence sent to a credit reporting bureau. They are required by law to investigate the correctness of any entry on your credit report that you dispute.

Free Credit Report Negative Entries

A lot of people will find negative entries on their credit report for small sums like an unpaid cell phone charge off or an unpaid utility bill. If you do find a legitimate negative entry on your free credit report for a small sum it is advisable to contact the creditor with a view to settling the outstanding balance and having the negative entry changed to read settled satisfactorily or some other positive wording.

This will have the effect of rising your credit score possibly even into the acceptable or good range.

Credit Score

Credit score or FICO score is a mathematical algorithm which rates the credit of individuals. Every credit score will fall into a numerical range from 300-850 with 300 being the absolu4te worst possible credit score and 850 being the best possible. Generally speaking credit scores below 600 are considered high risk, 620 being the dividing line between good and bad, 640 or above being pretty good, 650 is average , and above 690 or 720 is considered excellent.

The median score in the USA is reported as being 723 which on the surface considering the economy appears staggering. However this is what is reported and should be taken with a grain of salt.

Credit Repair

Other than requesting a free credit report and trying to repair negative entries a useful strategy for credit repair is to take out secured credit cards and other loans that are available to borrowers with bad credit. Some auto dealers will arrange loans for people with bad credit using a buy here pay here formula. The title of the car will not go into the borrowers name until the terms of the loan have been met satisfactorily.

If you are considering using this type of strategy to help you rebuild your credit score it is imperative that you ensure that the lender is going to be reporting your on time payments to the credit reporting bureaus. If your payments are not being reported then this loan will not help rehabilitate your credit score.

So ask question, know what you are getting into and when you do eventually take out a loan remember be responsible, never miss a payment, never be late with a payment, never exceed your limit on a credit or store card.

Cash Advance

A cash advance or payday loan is designed to meet the cash needs of working people who are running short of available cash and are in need of a short term loan to meet some financial commitment such as a car loan payment or rent. When the need for cash arises and a person does not have access to a credit card or bank overdraft then a cash advance or payday loan is the ideal to bridge the gap up until payday.

Cash Advance-Payday Loans

• To qualify for a payday loan cash advance a person needs to meet the following conditions:
•  The applicant must be at least eighteen years old.
• The applicant must be employed.
• The employment in most cases must be a minimum of three months in duration.
• The applicant must have a bank account.
• The bank account in most cases must be at least three months old.
• There should be no bad checks drawn against the bank account at the time of the payday loan application.
• A driver’s license or other acceptable proof of identification.

Cash Advance-Bad Credit Cash Advance

In most cases credit does not play a part in cash advance payday loans. The person simply completes an online application and the funds are wired to the person’s bank account. In most cases the funds will be available next day.

Cash Advance-Payday Loan Application

At the time of a first application to a payday lender for a cash advance there will be some paperwork and required documentation like drivers license and pay stubs. However for subsequent requests for cash advances there will be no documentation required if the previous loan has been paid off as per the conditions of the contract.

Cash Advance-No Fax Payday Loan

A no fax payday loan cash advance is the term applied to a second or third request for a cash advance from the same payday lender. Because the payday lender already has the applicants documentation on file and because the applicant has already paid off a previous payday loan with the same lender than all that is required for the cash advance to be issued is a simple online application. No faxing of documents is required and the cash advance will be wired to the person’s bank account. Payday loans are a quick hassle free way of lending cash till pay day.

Bad Credit Car Loans

Regardless of your credit history bad credit car loans are available and are far easier to get than most people with bad credit think. The reality of modern day living is that there is a whole segment of the economy that is living with bad credit. So if auto dealers want to sell cars to people with bad credit then it is up to them to make bad credit car loans available.

Bad Credit Car Loans-Dealers

Many car dealers specialize is selling cars to people with less than perfect credit who require bad credit car loans to complete the car purchase. Usually the cart dealer will not in fact be the source of funding or lender but will act as a go between, between the car buyer with bad credit and a lender who specializes in lending to people with bad credit.

The pay off for the bad credit lender is that they get good return for their money in the form of high interest rates and also they usually charge an upfront documentation fee of $500 to $1000 depending on the price of the car and the amount of the loan.

Bad Credit Auto Loans-Application

When applying for bad credit car loans a person must meet the following conditions.

• The person applying for a bad credit car loan must be at least 18 years old.
• The person must have a full drivers license.
• The applicant must be employed or have proof of income available to service the monthly car loan payments.

Bad Credit Car Loans-Down Payment

Most bad credit lenders will require a substantial down payment somewhere in the region of 20% of the price of the car when considering bad credit car loans. Most of this down payment will go to paying the documentation fee. Unfortunately for the buyer of a car with bad credit the up front fees and financing costs are considerably more than for a person with good credit.

Bad Credit Car Loans-Options

There are some options available to people with bad credit to avoid the high costs of financing  cars with bad credit car loans.

Get a Guarantor or Co Signer with good credit to co sign with you. This should have the effect of lowering the interest charged on bad credit car loans and with it the actual cost of the monthly bad credit car loans payments.

However it is important if you take this option to remember that if you default on the payments then the co signer will be liable for the payments on your bad credit car loans and also the co signers credit will suffer.

Bad Credit Loans

In general bad credit loans are for people with bad credit who need to obtain a personal loan. You can obtain a personal loan from a number of lending institutions that are accustomed to making bad personal loans. While bad credit loans can help you improve your credit if you make your payments on time, since you are perceived as a high risk, you will pay a higher interest rate than a person with good credit who does not need this. Most lenders will add a two or three percent margin to the current prime interest rate if you have a derogatory credit report. 

Bad Credit Loans-Bad Credit Personal Loan

Usually bad credit loans are limited to sums of less than $1500, however with a good payment history terms and size of future bad credit loans will improve greatly. It is important to make payments on your bad personal loan on time in order to improve your credit. Lenders look at a number of factors when determining if you are a credit-worthy risk for borrowing. If you have an acceptable debt to income ratio and are current on all your recurring accounts, you will qualify for the best financing packages available and avoid having to resort to bad credit loans for your financing needs. If your debt to income ratio is too high or if you have a history of being late on your payments, even a couple of times, your only option for borrowing might be bad credit loans until you can get your credit cleaned up. This takes time and perseverance, but it can be done.

Bad Credit Loans-Credit Repair with Bad Credit Loan

Ask the bad credit lender if they will be reporting your on time payments to the credit reporting agencies. This will have the effect of improving your credit score and will in turn help you to get far better financial terms should you seek a loan at a future time.

Bad Credit Loans-Bad Credit loan Terms

Because your credit is bad you will most likely end up paying a high interest rate and some up front documentation fee. Unfortunately there is no way around this, it is the price we must pay for letting our credit score fall.The good news however is that bad credit  is very repairable and the best way to improve your credit score is to take out  bad credit loans with a lender who reports to the credit bureaus and make sure that all payments arrive on time and that the loans are paid off fully as per the terms of the bad credit loans.