Category Archive 'Personal finance'

4 Things That You Should Know Before Applying for a Bad Credit Mortgage

Personal finance

While the last few years were not the best financially, things are better now. In fact, they’re good enough that you want to look into the idea of owning a home. Is it too soon? Will anyone approve you with some of the credit issues you had in the past?

The answer is yes. Help from Mortgage Central Nationwide or similar entities can pave the way for obtaining the financing that you need. Before you submit an application, it pays to know a little about what to expect. These four facts will help you get started.

There’s More Competition Than You Think

There’s a perception that people with poor credit have to take whatever they can get. The idea is that no bad credit mortgage lender is going to offer great deals. That’s not necessarily the case.

Like every other area of the mortgage lending business, there are those who offer better terms and conditions than others. It’s true that you’re not likely to get an offer equaling what you could get if your credit was in better shape. At the same time, do know that there are some decent offers for you to explore.

Qualifications May Vary Slightly From One Lender to the Next

Some bad credit mortgage lenders are more exacting when it comes to evaluating applications. With those, your past credit issues may carry more weight and you may need to have a slightly higher credit score. Be prepared to provide detailed responses about certain aspects of your financial state.

Others may place less emphasis on credit scores and focus more on where you are today. If you have a reasonable amount of income, are up to date on your current obligations, and most of your credit issues are a couple of years or more in the past, there are lenders who will be willing to take a chance on you.

The Loan May or May Not Come With Recurring Fees

The terms for the mortgage may differ from one lender to the other. With just about all of them, do expect some type of fees on the front end. Where you will see a difference is whether or not recurring fees are factored into the loan.

For example, you may find that there’s a payment processing fee that applies every time you remit a mortgage payment. There may also be some sort of annual account maintenance fee that’s added to the balance due. If possibly, consider looking at options like a Canada Wide Financial bad credit mortgage that keep the fees to a minimum.

Many Bad Credit Lenders Do Report to the Major Credit Bureaus

You’ll find that many bed credit mortgage lenders will report your activity to the major credit bureaus. That’s to your advantage, since timely loan payments result in positive comments. They in turn help to offset the negative comments from years past.

Before you commit to a lender, confirm that your activity will be reported. Going further, find out if the lender reports to one or more of the major bureaus. That will help you understand how much good can come from those timely payments.

Remember that buying a home is an opportunity to improve your credit. Choose the lender wisely and it will be arrangement that serves you well in more than one way.

Struggling to Pay Your Mortgage? 5 Things to Do

Personal finance

You have your forever-home. However, it won’t be your home for long if you haven’t been paying your mortgage. Although unfortunate, this is a scenario many people find themselves in. As it’s so common, there are several things to do that would help. Most of them are offered by your bank themselves. We have discussed 5 of these points in our article.

A Loan Modification

Your mortgage may have been easy to pay. But due to money mishandling, you could be struggling to pay the sum. It may seem like the end of the world, but it’s not. You can speak to your bank and get your payment terms adjusted. They would adjust the period you have to pay them back. If you’re lucky, they may make you pay just the principal amount, which excludes the interest as a whole. This would lessen your mortgage greatly

A Repayment Plan

You’ve probably missed several payments so far. Repayment plans are when banks let you pay them back at a rate you’re capable of. They are easier to come by, as the amount due won’t be reduced. There would be new terms to the plan, which you’re supposed to carefully go over before agreeing to it. The representative assigned to you will work with you to come up with an appropriate payment period.

Loan Refinancing

Refinancing is probably the most common solution to your problem. You can work with another bank to pay off your mortgage. A refinance mortgage would result in a loan that’s easier to pay than your original one. This is due to the interest rate being drastically lower.

Loan Forbearing

Forbearing is similar to loan modifications. Your mortgage would be made easier as you may only have to pay the principal sum. The bank could also extend the years on your mortgage, and your interest rate may be reduced. They may pause your loan as well, letting you get back on your feet. However, this is all temporary. You’ll have to pay back what’s due later on.

Short Sale

Probably the most extreme fix, you’ll have to sell your property. Unfortunately, the amount you’ll be able to sell it for may be less than what’s due to the bank. However, they would waive it off.

Final Thoughts

When it comes to purchasing a home, people don’t realize how difficult it is to handle a mortgage. Although they may be able to pay it right now, it could easily get harder in the future. Instead of the bank taking your property, thankfully, there are things to do.

By speaking to them, you can snag a loan modification. It’s probably the best deal you could get – you’d have the terms of your mortgage adjusted so that you only have to pay the principal amount. Similar to it, loan forbearing exists. You’d pay reduced payments, but this is temporary. The bank requires that you pay back to the original amount later. So, what do you think?

What Are the Basics of Collateral Loans?

Personal finance

When it comes to taking your loan the starting point should be doing complete research regarding your options. This also includes understanding your current financial situation that plays a major role in this whole situation. When it comes to defining the term collateral, the best definition that grasps the meaning is that you own something that the bank can take if you fail to pay off your initial debt or loans. Any asset or property that the borrower has can be promised to the lender as a secure option for the loan. To put this in other words, the lender of the loan has the ability to take over the asses if the borrower does not repay the loan according to the previous contract.

Taking into consideration the definition, we have constructed this article to help you understand the basic functions of this type of loan so that you are familiar with the possible opportunities you have. We are going to take you through understanding what collateral is and how does it actually work. So, continue reading.

What Is a Collateral Loan?

As mentioned above, a collateral loan is a form of secure plan where the lender can take an asset from the borrower if he or she has not completed the repayment of the initial loan. For all of this to be possible, there has to be a form of a contract where both parties agree upon this route. Because without any contract the collateral loan cannot function.

To put all of this in other words, or as bestpersonalloans.com covers it here, collateral simply indicates an alternative form of payment. Usually, the lender, in this particular situation can actually sell the collateral so that he or she can cover the losses that were made during the period of the initial loan.

Types of Collateral Loans

There are several types of how a lender can compensate for the unreturned borrowed money, which is commonly referred to as a collateral loan. No matter if you are a borrower or a lender, you should really make sure that you have everything in order and you are familiar with the most popular types of collateral loans which consist of: real estate, auto loans, and personal loans.

The nature of the loan usually determines the type of collateral and often falls under the categories mentioned above. So make sure that you have every necessary information regarding the debt you have to repay so that you can determine whether you will have to deal with a collateral loan. This also goes for the borrower, if you are in this position then you should also be familiar with the types of collateral loans so that you can sign the contract without any further complications.

The Difference between Collateral and Security

The confusion begins with the statement that a collateral loan is a secure plan when the borrower fails to complete the repayment. So, to avoid the confusion of these two terms you should take a look at the differences explained below.

A collateral loan can be a property asset that is given by the borrower to secure the loan. This is a way of assurance that the lender gets for the possibility of a significant loss. Security loan, on the other hand, is often referred to as any financial asset that functions as a collateral loan. The best way to draw a distinction between these two terms is to think of parcel of land, a car, or a house as collateral, and bonds, swaps, and stocks as a security loan.

The risk regarding collateral that concerns the borrower is the chance of possible failure of repayment. This is where the lender can take an asset in order to cover the financial loss in this particular period.

What Makes an Unsecured Personal Loan Better Than a Payday Loan?

Personal finance

If you could use some cash to resolve some kind of pressing financial issue, you have plenty of company. Many people face this situation on any given day. That’s fine if you have excellent credit and can obtain a loan with relative ease. What about those who have credit that’s not so great? Do they have not choice but to seek out a payday loan lender? The answer is no. An unsecured personal loan will accomplish the same end and provide some benefits that a payday loan could never provide. Here are some examples.

A Lower Rate of Interest

There’s no doubt that an unsecured personal loan offers better conditions than payday loans. One of the first things you will notice is the difference in the interest rates that come with each financing option. Simply put, a personal loan will have a more competitive rate of interest than any payday loan.

What does that mean? Over the life of the loan, you’re likely to save a tidy sum in terms of interest payments. That’s especially true when you opt for a personal loan with a shorter duration. As a way to get the money you need now without creating a greater financial burden, the unsecured personal loan comes out ahead.

Longer Repayment Period

The nature of a payday loan is to repay the borrowed amount plus interest within a short period of time. Even with the most liberal payday loan terms, borrowers are typically expected to repay the obligation over the next one to two pay periods. The most likely scenario is that the debt becomes due when your next payday rolls around.

By contrast, an unsecured personal loan could allow you anywhere from a couple of months to a year or more. Instead of having to pay everything in such a short time, you can structure the loan so that you have a series of manageable monthly installment payments. Thanks to this approach, it’s easier to repay the debt without putting stress on your household budget.

Fewer Fees and Additional Charges

Payday loans are certainly convenient, but there’s a price to pay for that convenience. Along with higher interest rates, there are likely to be a number of fees and charges bundled into the mix. Some of them may be easy to understand. Others will take some research to figure out.

With personal loans, there are still some fees and charges. The difference is that they are usually fewer add-ons and it’s easier for the average consumer to understand them. If you’re the type of person who values clarity when it comes to entering into binding agreements, the personal loan is easily the better choice.

Your Timely Payments are Often Reported to Credit Bureaus

If there’s any payday loan lender that reports payment histories to the major credit bureaus, rest assured that lender will be difficult to find. The industry standard is to not report activity to any of the credit agencies. That means the money you repay to the lender will do nothing to help you improve your credit score.

With unsecured personal loans, it’s not difficult to find lenders who will report your timely payments to at least one of the major credit agencies. Some lenders will report to both of them. Along with offering you better interest rates, more manageable repayment terms, and loan contracts that are easier to understand, this type of lender will also help you boost your score by a few points.

The bottom line is that there is no real benefit to choosing a payday loan over an unsecured personal loan. If you’re in need of some financing, take a look at what personal loan lenders can offer you. If you compare their terms and conditions with those offered by the typical payday loan lender, it will be easy to see which solution is in your best interests.

How to calculate your foreign exchange fees in Excel

Excel function tutorials, Personal finance

Moving currency across borders is far more expensive than most suspect. That’s because banks and money transfer providers charge more than the wire fees you see upfront.

These businesses make money in three different ways. Their wire fees are the most visible charge. However, two other categories often fly under the radar – commissions, and the exchange rates they offer.

To calculate how much you’re paying in foreign exchange fees, you need to account for all three factors. Below, we’ll show you how to create an Excel spreadsheet that will evaluate the fees charged by money transfer providers.

The easy part: accounting for wire fees & commissions

Let’s get the basic stuff out of the way first. The first two factors – wire fees and commissions – are absolute numbers that don’t change much from day-to-day. That makes them incredibly easy to account for.

After creating the outline of your spreadsheet (as shown above), enter the institutions you’ll be comparing in column A. Then, enter your transfer amount in column B. Next, find the fees these institutions charge upfront. $30 is our default for the banks, as it’s the lowest amount many American institutions charge for international outbound transfers. Enter what you find for each service in column C.

Then, if you can track it down, enter the commission percentage in column D. Enter it as a decimal (e.g., 0.02, not 2%), so it will work in our equation. However, we’ll acknowledge that this figure is hard to find in the public sphere. For instance, Western Union pays agents a commission for the transfers they process. However, to protect itself against competitors (and from public scrutiny), it treats these figures as a trade secret.

Above, we’ve entered a figure of 0.02 for the banks. This figure is a standard rate many airport exchange desks in airports earn on every transfer they make. We use 0.06 as a conservative estimate for Western Union’s agent commission – however, some rumours state that some can earn up to 30%!

The math-intensive part: calculating the exchange rate margin

So far, putting together our spreadsheet has been an exercise in data collection. Here’s where it starts to get “mathy” (yes, we’ve just invented that word… deal with it.) You’ll need to find two exchange rates – the one your institution charges, and the interbank (aka the “wholesale”) rate.

Some banks make this data readily available, like Toronto Dominion Bank in Canada. However, many American institutions aren’t fond about making this info public. To be fair, Bank of America kind of does it, but only for inbound transactions (e.g., they’ll show you their CAD/USD rate, but not USD/CAD.) As a result, you may have to call your local branch.

Next, find the interbank rate. For decades, XE.com has been the web’s trusted source for this data, a purpose it continues to serve. Plug in the amount you want to transfer, your desired currency pairing (e.g., USD/CAD), and click the arrow button. You’ll get the interbank rate, as well as the inverse for the pairing you chose.

Now, take your bank’s rate and subtract it from the interbank rate. Repeat this for every money transfer provider you’re analyzing, and input the result in column E.

The hardest part: Calculating your total cost

Time to find out how much each money transfer provider is charging you in fees. We put the “Total Cost” column to the right of the others to add emphasis – we advise you do the same.

Begin the formula creation process by clicking the first cell in Column G, and entering the equal symbol (=). Start with the easiest component – wire fees. Click on the first cell in Column C, then enter a plus sign (+).

To calculate the commission, we’ll need to make a bracketed equation. Open a bracket, then click on the first cell in Column B (your initial transfer amount.) Then, enter the multiplication symbol (*), followed by clicking on the first cell of Column D (the commission percentage.) Remember to keep this figure in decimal form, or you’ll break the equation.

Close the bracketed equation, and enter another addition symbol. Then, start the second bracketed equation – this one will determine the exchange rate margin. After opening the bracket, click on the first cell of Column B. Follow it with a multiplication symbol, and then click on the first cell of Column E.

Close this bracketed equation, and hit enter. If done right, this should calculate how badly your bank is ripping you off. According to the spreadsheet we’ve made for this article, your equation should look like this:

=C3+(B3*D3)+(E3*B3)

Your final step: Duplicate these results for the remaining entries. Hit CTRL+C  (Command+C if you’re a Mac user). Then, highlight the remainder of the cells in Column G and hit CTRL/Command+V. This step will copy the formula to each row, giving you data on the remaining money transfer providers.

Not an Excel wizard?

If you can’t be bothered to craft your own spreadsheet from scratch, we don’t blame you. However, you shouldn’t allow money transfer providers to take liberties with your money.

Over on MoneyTransferComparison.com, they have an international money transfer fee calculator. Enter your initial transfer amount, and the amount sent. In seconds, you’ll know whether you got a killer deal, or if you got fleeced.