If you have a bad credit history, it is most likely that you are having money problems. Or you are extremely careless with your payments. Keep missing them and you have not discovered direct debit yet. Money being tight and the economic conditions do not help; you may be looking at cashing out some of the equity in your home (providing there is enough equity). Is the refinance a good solution for you? First thing to do is to stop checking the best interest deals on the market. They are not for you. You would need to disclose your credit position clearly and see what you would be offered. That really depends how bad your credit report is. Once you find out the real deal for you, you need to check this with your existing interest rate. If there is about 2% difference in your favour, you could say you are in business. 

If your current mortgage interest still looks good comparing to the rates you are offered, you may then want to cash out the equity with a second mortgage instead. That way you would still keep your existing interest rate and even though you are not getting best of the rates that would only apply to the cash out amount.

If you can wait, my advice would be to try to improve your credit score before attempting to get a refinance. Read my other blogs about how to improve your credit score without using a credit repair agent. I do not know credit repair agents services, so I can not say much about them. I read all the time, people writing to say that Bad Credit mortgage is not a problem. What they mean is that they can get one for you. However, you are the one to pay for it. If you have sizeable credit card debts with high interest, a secured loan on your house would offer you a better rate and a longer period to pay. This would be a good case for a mortgage of any kind with bad credit. In this case, the mortgage loan would give you time to sort your affairs. If you can come up with a good reason to take the higher interests, you would be able to justify refinance or second mortgage. There are many other factors to consider and most of them rest on personal circumstances and choices. So have long hard look at your current financial position and your options and come up with the best solution to reach your goals.

Filed under: Articles, Refinance Home Mortgage Loan by JS Lee
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Mortgage applicants will come across to this term at some stage. A figure may be quoted under this heading in the costs. They may think that this insurance provides some sort of benefit to them directly or confuse it with any other insurance.

Private Mortgage Insurance (PMI) is extra insurance that mortgage lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home’s value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.

PMI plays an important role in the mortgage industry by protecting a lender against loss if a borrower defaults on a loan and by enabling borrowers with less cash to have access to homeownership. With this type of insurance, mortgage applicants can qualify for a loan to buy a home with as little as 5 percent down payment. This means that people can buy a home sooner without waiting years to accumulate a large down payment. 

A home buyer or a home owner who refinance the existing mortgage can avoid to pay PMI by coming up with 20% down payment or not refinancing more than 80% of the value of a property. This will save considerable amount every year.

PMI is a protection for the mortgage lender. It does not cover anything else. Home owners should not confuse PMI with any other cover. It does not pay monthly mortgage payments for the home owner in case something happens to them or it does not cover home for any damages. These are separate insurances.

The Home Owner’s Protection Act allows the home owner to request the lender to cancel the PMI should they pay down the mortgage below 80%. It also requires the lender to cancel the PMI automatically when the loan amount falls below 78%. The home owner should not be delinquent at the time of request or automatic cancellation.

Filed under: Articles, Mortgage Rates and Fees by JS Lee
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However boring it may be it is got to be done folks! I want to start here with a question. How many of us carefully look at our bank and credit card statement and how many of us just quickly overlook at it and put in a draw? I hope you are not in a state that you can not ignore credit card statements anymore. It pays to look into it carefully. Only the other day I have found out that two direct debit from the same insurance company has been running for a year to cover my home insurance. I had to spend much more time to sort things out. In this case the insurance company has seen their mistake of not canceling the previous direct debit when they set up a new one and refunded me the money. Look into your direct debits, standing orders, check if you recognise every spending and if all the money due to you has arrived. That is all really, it should not take more than 5 minutes of your time, but it is well worth it.

Always try to get the best deal for your money, try to bargain, it works. I tell you a little story of mine. I was cloth shopping with my dad for the school when I was really young. There was this peace of clothing that I liked it very much. My father asked the price and offered the shopkeeper 2/3 of the price. Shopkeeper did not accept it, then my father took the walk to the door. Just before we were out of the door the shopkeeper confirmed his acceptance of our offer and we bought it for the 2/3 of the price. Then I told my father that I really liked the dress and was worried when he walked to the door. He told me that the bargain would not have worked if you were not prepared to walk away from it. He added that we now knew the shop and could go back and buy it anytime, if the price was not lowered.

The message of the story is that look to see if you can save money. The obvious ones are car insurance, home insurance, utility bills, mobile phone bills, even the mortgage you might have. Nowadays, you do not even need to haggle with a shopkeeper or a salesman, you can do everything online without being in contact with anyone. Do it for the sake of your wallet. Nobody can afford to waste money no matter how reach they are. Why do you think the rich people are much more careful with their money? Why do you think they are rich?

Filed under: Personal Finance by JS Lee
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I have lived in Scotland for a while. The Scottish people are probably the most careful nation in the world when it comes to money. I have heard the shopkeepers telling me “oh no you kind o not spend that much money”. We are talking about a few bucks here and this is coming from a shopkeeper whose job is to sell you something. It is engrained into their thinking.

That is what we need when it comes to spending our money. Every buck that you spend has got its alternative value. I mean you could have spend that buck for now save it for the future, buy a coffee or candy with it. However if you spent it, it has gone forever. I am not going to talk about not spending your money and save it all the time here. What I am going to talk about is if you just watched your money you could make it go further. There are only so many hours in the day that you can work and there is a limit to how much you can make. The other way of making money is by being careful with it.

Probably the best way of looking after your money is to start with a monthly budget. Even a rough budget would do. Planning will make that money much more worthwhile. Let’s think, instead of spending few bucks here few bucks there, you make a plan and say I will not waist my money but I will go out on a Saturday night and spend a good $50 for a meal. You will see that all that time you refrained from wasteful spending added up and made much more than $50 and you enjoyed your night out more as you were looking forward to it. I think you got the idea.

 I have to leave it here just now, but I will come back to this subject and we will look into it in more details in my future posts. It is probably a boring subject but I promise you it is worth the time.

Filed under: Personal Finance by JS Lee
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