Monday, October 22, 2007

HELOC and security for the loan

Home equity lines of credit (HELOC) will require property to be pledged as security for the loans. Obviously, this kind of borrowing may jeopardize your home and you, if you default on a loan or even if you are late with your monthly payments

A loan with a balloon payment, that is a large payment at the end of the loan term, may result in your borrowing more money to pay off the debt. It may also put your home at risk, if in the course of the original loan you are deemed ineligible for refinancing.

In the event that you sell your home, the conditions of most loans will require you to pay off all debts on your credit line at that time. While home equity loans provide you with ready cash quite easily, you tend to borrow more freely as well.

Always compare HELOC rates from several lenders to assure that you get the lowest rate possible.

Consolidate debt with home equity as security

A debt consolidation home equity loan is a secured loan where your property will be security against the loan. The lender will have a lien on your house until you pay off the home equity loan in full. While you'll continue to own your home as loan collateral, the debt consolidation loan will keep the creditors away and keep you out of bankruptcy. You'll be able to save a little, because the single monthly payment will be considerably less than the sum of the ones you had before.

The first thing to do once you've obtained your debt consolidation loan is to look over the use of your credit cards, so that you don't use any of them in times of temptation, thereby increasing your debt. This will definitely put you right back in hot water.

Tax deduction and home equity loan consolidation

Another possible advantage is that interest you pay on your equity debt consolidation loan may be tax deductible. Normally, if you add your first mortgage to a new debt consolidation loan, and the total does not exceed 100% of the appraised value of your property, the interest you pay will be fully deductible.

Tuesday, June 12, 2007

She had really bought her VantageScore, which was jointly introduced this year by the three big national credit bureaus: Equifax, Experian and TransUnion. The VantageScore is based on a scale of 501 to 990. If any mortgage lenders use it, they don't talk about it. The woman had a VantageScore of 668, which made her think she was a prime mortgage customer. But it turned out that her FICO score was 574, casting her into the subprime category.

It's as if she turned on the radio, heard it was 32 degrees outside, put on a coat and stepped out, only to find that the temperature was 32 degrees Celsius -- about 90 degrees Fahrenheit.

Bad news for othersShe wasn't the only person who got a nasty surprise. Another Bankrate reader, who asks to be called "Bob from New Hampshire" because he doesn't want everyone to know his credit score, says he recently bought a VantageScore and it was 754. Soon after, he discovered that his FICO score was 681 -- a most unwelcome surprise. (He says he quickly boosted the FICO score 20 points after paying off a credit card.)

Bob feels that the credit bureaus are bilking consumers by selling the VantageScore. "If the score they're giving you here, you're paying hard money for, and it's not being used, what is the point?" he fumes. "If it doesn't have any practical value, they should disclose that upfront: 'This is not the widely used FICO score.'"

If you know where to look for them, you can buy the equivalent of FICO scores on the three bureaus' Web sites. TransUnion calls it a credit score, Equifax calls it a FICO score and Experian calls it a Plus Score.

Certificate of Deposit Calculator

Use this calculator to find out how much interest you can earn on a Certificate of Deposit (CD). Just enter a few pieces of information and we will calculate your Annual Percentage Yield (APY) and ending balance. Click on the "View Report" button to see a detailed schedule of your CD's balance and interest earned. Unhappy with your current CD rate? Check out Bankrate's exclusive list of the highest yielding cds in the United States.

DefinitionsInitial deposit: The starting balance for your CD.Months: The total number of months for this CD to mature.Interest rate: The published interest rate for this CD. Make sure to enter the actual interest rate, not the Annual Percentage Yield (APY).Annual percentage yield (APY): This is the effective annual interest rate earned for this CD. A CD's APY depends on the frequency of compounding and the interest rate. Since APY measures your actual interest earned per year, you can use it to compare CD's of different interest rates and compounding frequencies.Compounding: Interest earned on your CD's accumulated interest. This calculator allows you to choose the frequency that your CD's interest income is added to your account. The more frequently this occurs, the sooner your accumulated interest income will generate additional interest. You may wish to check with your financial institution to find out how often interest is being compounded on your particular CD.
Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We can not and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.



Conflicting credit scores cause confusion

When you buy your credit score, it's almost certainly not the same number your mortgage lender will see.
Your lender might see a lower score, or even one calculated on a different scale. It means you could apply for a loan thinking you deserve a low interest rate, but end up paying a higher one because your score wasn't as good as you assumed.
Confusion arises because consumers and lenders often see different credit scores. As if that didn't create enough of a misunderstanding, customers, lenders and credit bureaus each view credit scores from their own perspectives.



What creates the confusion?

Consumers buy their credit scores to find out if they're going to be eligible for the lowest rates or if they'll have to pay higher subprime rates.

Lenders use credit scores to estimate how likely the borrower is to make late payments.

Credit bureaus sell credit scores to consumers to make money and to teach people how to improve their credit profiles.

When these viewpoints clash, consumers get frustrated. One Bankrate reader
complained to financial advice columnist Dr. Don Taylor that she bought her credit

scores from two of the big three credit bureaus as part of her search for a mortgage, only to discover that the scores were based on a scale that, from her standpoint, misleadingly pumped up her creditworthiness.

She thought she was buying a FICO score, developed by Fair Isaac Corp., and used by almost every lender in the mortgage business. Savvy consumers know that the FICO score is on a scale of 300 to 850 -- the higher the better -- and that certain scores serve as dividing lines between subprime (high-rate) borrowers and prime (lower-rate) borrowers.