Qualifying For A Bigger Mortgage

A bigger mortgage may not always be the most financially prudent decision. Factors that a lender considers while giving a loan are as follows:

Stable Income: Most lenders will look at your income over a certain period of time. They are more interested in looking at your stable income. For salaried personnel, this could mean their fixed salary and bonuses if these are stable in nature. For the self-employed ones, the bankers will scrutinize the tax returns over a period of time to find out the stable income. Most lenders have a maximum lending limit that is a percentage of this stable income. The larger your stable income, the larger mortgage you can avail.

Cut Down On Additional Debt: Lenders will look at the free cash flow that you have. They call it your disposable income. Every small loan that you take cuts down your free cash-flow. So, the car loan and the vacation loan all act against your ability to take a bigger mortgage. If you are in a position to pay them off in full, please do the same to increase your borrowing ability.

Clean Credit Score: A good credit score improves your chances of getting a bigger mortgage. The formula that calculates the maximum possible borrowing also considers your credit-worthiness. Ensure that you pay your bills on time. Credit scores are not built overnight.

Bigger Down Payment: A bigger down payment reduces the risk of the lender. It also means that you have been prudent enough to save money to make the payment. Most borrowers will finance a bigger loan in the Loan to Value ratio (LTV) ratio. …

How Credit Reporting Works

Our society lives and thrives on credit. There are more and more lenders offering loans to different people. Many of these loans, such as credit cards and personal loans, are unsecured. This means that the lender is offering loans based on the reputation of the borrower rather than the number of assets he has as collateral. It is therefore essential that they have the required information before they make their decision. This information is provided in the form of a credit score.

Lenders Collaborate: Almost any loan that you take can be traced back to a few lenders. Thus, all the lenders have most of the information, amongst themselves, they need regarding lending the money. It is for this reason that they have set up credit bureaus. It is in their interest to submit information about every transaction with every borrower. The aggregated information gives the prospective lender a good idea about the creditworthiness of an individual. Every lender works for it and gets the benefit.

Periodic Reporting: Lenders report periodically to a third party organization. Usually they report every month or so.

Point System: Instead of considering the vast variety of information that a credit report may bring along, lenders usually look at a score. The point system has been well developed and provides the lender a good idea of the creditworthiness of an individual. For every favorable credit deed, such as paying bills on time, there is a positive score. Similarly, for every negative deed there is a negative score. This point system ensures that lenders do not have to deal with complex information.

Differential Interest Rates: People with good credit scores get the rewards in the form of lower payments, while people with bad credit scores are penalized.…

How People Use Credit

Lenders are known to analyze your credit behaviour and put you into categories. This notion comes from the fact that there are a few broad ways, in which most of us use our credit. Here is a list of few behavioural types.

Transactors: This is the type of credit usage that most people intend to do. The idea is that credit companies give an incentive to use their services. Instead of transacting in cash, if one uses credit, they are able to make money on the interest earned in the interest free periods as well as the gifts and freebies that are on offer. However, this plan goes wrong when people forget to stick to the budget. Impulsive spending soon means that you are spending beyond your means and that paying in full becomes more and more difficult.

Revolvers: This is the kind of people that use credit to fill their monthly gap. To them solvency is not an issue. They are sure that they can pay the loan. However, it is the timing of the cash flow that is difficult for them to manage. Thus, they tend to fall into a cycle of keeping balances or missing payments, all of which affects their credit score.

Pretenders: The last category is the pretenders. These are usually people who have just started using credit. Many of them think about the credit card as a free tool. They think these as freebies on offer. They have no plans of repayments and have no clue what their financial state is.…

High Cost of Not Maintaining Credit

Credit bureaus consider absence of information similar to having bad information. Hence the only way to lead a good life is to ensure financial discipline throughout your life. Here is why opting out of credit or having a bad credit is not a viable option:

Expensive Mortgage: Nowadays, almost every American takes a mortgage on their house. At least every average American does. It is difficult to imagine getting by your life without a mortgage unless you are planning to rent out for your entire life. People with good credit score have a considerable upper hand in this regard. They tend to qualify for mortgages, which are subsidized by the state. The cost of having a non-conforming mortgage is at least 30% to 40% higher in the long run.

Expensive Credit Cards: These are useful in tough times caused by unemployment or other financial failure. People with bad credit history or none have to pay 30% to 40% more in interest charges.
Expensive Personal Loans: If you are planning to start your business or remodel your house, you may need a personal loan. That again will be expensive.

Not maintaining credit will shut you out from the mainstream financial system. The lenders need positive information about your financial behavior to make you loans on good terms. Since most people cannot get by without taking loans, ensuring a good credit score and favorable terms is not such a bad idea.…

6 Things to Remember Before Going for Logbook Loans

So you’ve finally realized that now it’s time you should straighten your credit. All determined you open up your frugal living booksto keep a check on your expenses but what about the huge debt you’ve accumulated because of your lavish habits? Applying for loans isn’t really an option because of your credit history which is already screwed up. To help you get things in order, you can now consider logbook loans. But before you apply for these instant loans, here are a few things you should know about them:

-Payday Loans Are Difficult To Get – Pay day loans are an easy option to bail you out of an immediate monetary crunch but they are hard to get as banks check your credit history before lending them.

-Logbook Loans Require No Credit Check – Logbook loans give the borrowers the loan without carrying out any background or credit checks. So if you are a student with no credit history or if you had a bad credit history once because of unemployment, you can still borrow money.

-Easy Eligibility Criteria – Logbook loans require you to be above 18 years of age, a citizen of USA and to have a vehicle registered under your name. You are entitled to a loan if you satisfy these criteria. It is that easy!

-No Elaborate Paper Work – Unlike bank loans, logbook loans do not require you to fill long forms or submit numerous documents. You have to fill a simple form stating your name, address, contact details, and other details about your car- the make, year of production and mileage. These details have to be current. You have to furnish the V5 to prove your ownership of the car. You also need to furnish an ID with a recent photo, your pay slip and a utility bill.

-You Can Apply Online – You do not have to go the lender to fill out your application form. You can simply log on to their website and fill it out. You only have to go with your car before borrowing the money so that experts can assess your car to fix a loan amount.

-Even though the car will be used as collateral, you are free to use the car as you wish. There will be no terms or conditions on its usage. These points may help you decide why logbook loan will the best solution to your short term financial problems.…