A new mortgage law in Georgia offers extra protections to people with bad credit looking for home loans. In the past, some bad credit lenders in Georgia were able to make loans to people who could not afford to repay them, and they were able to overcharge for these loans too. Senate Bill #57 has been passed and sent on to the Georgia State House of Representatives for approval. Here are two important protections the bill as written would provide: Continue reading ‘Georgia Subprime Mortgage Law Offers Protections for Bad Credit Borrowers’
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Times are tough, and if you had bad credit when you got your mortgage, you might still have bad credit and be unable to refinance. However, if your mortgage is causing you some hardship and you are in danger of defaulting, contact your mortgage lender about a loan modification. Continue reading ‘Can’t Refinance with Bad Credit? Maybe You Can Modify’
The surest way to clean up bad credit is to pay your bills on time for six to twelve months; at that point your scores should have improved substantially and with another six to twelve months you could even have good credit. But for many people, paying on time is not simple. If you have a checking account with electronic banking and a debit card, you can simply pay your bills automatically, or online in seconds, or call and pay with your debit card, or even use the snail mail and send in a check.
But for those without a checking account, paying bills on time is a greater challenge. Say you get your paycheck on the first and it’s Friday; your mortgage is due on the 5th. So on Monday you go to the bank your employer uses (and the branch might be on the other side of town — there goes your lunch hour), you cash your check and buy a bunch of money orders to pay your bills (or you head to a convenience store because the money orders cost a lot less there), you make another stop to buy stamps, then you pull everything together and mail in your payments. A simple task like paying a few bills can take hours — and if you get sick, have a family emergency, or work a double shift, you may end up paying late despite your best intentions.
“Second chance” checking accounts help those who are listed in Chex Systems or Telecheck. If you have been denied a checking account because of bounced checks in your past, you may be able to join decent society again with a second chance checking account. Second chance checking accounts are offered by banks and credit unions. They may require a substantial deposit, and there will likely be monthly maintenance fees. Look for an account that will convert to a regular checking account if you don’t bounce any checks for a certain length of time. Some of these even come with financial management counseling to help you improve your payment history.
Second chance checking accounts can help give you a fresh start and improve your credit rating. By making bill paying easier, you improve your likelihood of paying on time. Start yourself on an upward trend — get a checking account, improve your payment history, qualify for lower interest rates, pay off debt, get a better mortgage, save money.
It’s no secret–mortgage underwriting guidelines have become stricter, and home loan refinancing has become much harder to come by. For those who don’t have little halos hanging over their heads, getting approved for a mortgage refinance may be a pipe dream. Ironically, one of the exceptions to this rule is bad credit refinancing. So these days, bad is good. Continue reading ‘Refinancing for Borrowers with Bad Credit? Not a Pipe Dream’
You can’t browse the Internet or pick up a newspaper without someone telling you that if you don’t want to be a financial idiot and end up homeless and stealing from bag ladies you need to pay your mortgage off as soon as possible. Because you will pay less interest over the life of the loan, retire your mortgage early, and beautiful supermodels or hunky movie stars will throw themselves at you. And to a certain extent, that’s true (not about the models, silly). But you do pay less interest over the life of the loan and you may feel more financially secure with no mortgage. Continue reading ‘Should You Pay Your Mortgage Off Early?’
If you have bad credit, just hope you don’t live in California, Florida, Arizona, Michigan, or Nevada. Major lenders are piling on the poor people who own homes in these states, requiring higher credit scores and charging more to lend in these designated “distressed” areas. On Monday, one of the largest American banks is joining in the beatdown of distressed states. Continue reading ‘Lenders Making the Crisis Worse?’
On October 1st, new rules for sub-prime mortgages and bad credit home loans finally took effect–only about fifteen years overdue, but better late than never, right? Continue reading ‘Sub-prime or Bad Credit Mortgages Have New Consumer Protection Rules’
While news that lender underwriting guidelines have toughened up is old stuff, and most people now know that unless they are candidates for financial sainthood they will be dinged with surcharges for everything from missing credit score cutoffs to buying a condo to obtaining subordinate financing (a second mortgage to increase your down payment). And most people know now that loans are largely underwritten by computer programs. What you probably don’t know is that an automated approval from Fannie Mae or Freddie Mac may not be worth the paper it’s printed on. Continue reading ‘Today’s Mortgage Insurance: Even if You’re Approved, You’re Not’
One thing you read about in connection with subprime and other loans is to beware of prepayment penalties. Maybe it’s the word ‘penalty’ that makes this feature seem sinister. However, lenders don’t expect something for nothing — by agreeing to refrain from retiring your mortgage for a certain number of years you make lending to you a safer investment for the lender — and there can be substantial rewards involved.
For example, you may be offered a lower rate. Or a discount on the loan fees. To determine if accepting a prepayment penalty is a smart move, consider the following:
1. The type of penalty. Prepayment penalties come in two forms, “hard” or “soft.” “Hard” prepays are assessed whenever the loan is paid off before the penalty period expires — this means if the property is sold, if you refinance, or sometimes even if you make a substantial principal reduction (lump sum payment), often anything exceeding twenty percent of the original balance. “Soft” prepayment penalties come into play only in the event of a refinance or substantial repayment — if you sell the home you don’t have to pay it. So if you think you might sell within the penalty period you wouldn’t want to have a hard prepayment penalty but a soft one would be okay.
2. The terms of your loan. Many subprime loans involve a period in which the rate is fixed, then the mortgage converts to an adjustable rate mortgage. Bad credit ARM terms might not be favorable so you should avoid a prepayment penalty period that exceed the fixed rate part of the loan. For example, if the rate is fixed for the first two years of the mortgage, don’t take on a 3-year prepayment penalty.
3. The size of the reward. If taking on a prepayment penalty gets you a lower rate, a mortgage calculator can show you the difference in monthly payment and how much you would save during the time you expect to keep your mortgage. If the lender offers you a few hundred dollars in exchange for a 5 year prepayment penalty it’s probably not enough.
Like most mortgage loan products and features, prepayment penalties are not inherently good or evil. They can save you money when taken at the right time and for the right reasons.

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