Secured home loans are typically also known as home equity loans where your home is used to secure the loan. This loan can be a fixed amont for a fixed term, or it can be a revolving line of credit that can be drawn down as needed. These loans are often taken out to cover major expenses such as medical bills, college education costs, automobile purchases, or home renovations.

The loan amount in this type of loan can actually be a credit limit which is calculated by taking a percentage of the home value minus the balance owed on any existing mortgage loan. Qualifying for a secured home loan is no different thsan qualifying for any other type of loan. It boild down to your credit history, income, and current debt load.

Secured home loans usually come with a variable interest rate that is tied to some publicly available financial index such as the prime rate or one of the Treasury rates. Mnay lenders will, at some point in the life of the loan, offer the availability to change the rate to a fixed payment rate. Make sure you research all terms and conditions of any loan you are evaluating to see if this option is available.

As with other home loans, there are also closing costs associated with obtaining a secured home loan. In addtion, based on the loan to value (LTV) ratio (loan amount divided by home appraised value), there may be private mortgage insurance (PMI) that will need to be paid. This typically true of any loan over 80% LTV.

When evaluating secured home loans, research your lenders carefully. Choose a lender that specializes in home equity loans and will work with you during the processing of the loan.

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Finding the loan that is right for you involves wading through all the details of any given offer. It is key to understand loan terminology if you want to be able to compare apples to apples when choosing between loan programs. Just comparing interest rates is not enough. There are many other factors that come into play when determining the financial feasiblility of borrowing money.

There are two main components to a loan. There is the principal, which is the amount of money you borrow. And there is the interest, which is the surcharge you pay back over and above the principal amount you borrowed.

The key document in any loan transaction is the promissory note. The promissory note is the contract between the borrower and the lender and explains in great detail all the terms and conditions of the loan. It provides the details of what is expected from both parties during the duration of the contract such as repayment terms, payment schedules, and payment delinquency penalties.

The following are some of the key terms found in the promissory note and other related loan documents:

Origination Fee

Processing the loan application and setting up the actual loan for disbursement to the borrower is called “originating” the loan.  Some lenders charge origination fees, especially when issuing mortgage loans.

Often, the origination fee is taken from the principal before it is given to the borrower. This means the borrower isn’t given all the money that’s borrowed, but must still repay the total amount as if he or she had been given all the money.

Application Fee

Although it is illegal to charge an application fee for a federal loan, lenders may charge an application fee for other types of loans. This is a fee charged to process the application. It is usually not taken from the principal of the loan and must be paid when you apply for the loan, regardless of the loan amount.

Interest Rate

This is a percentage of the loan amount that you’re charged for borrowing money. It is a re-occurring fee that you’re required to repay, in addition to the principal. The interest rate is always recorded in the promissory note.

Sometimes, the interest rate remains the same throughout the life of the loan until it is all repaid. Other times, the interest rate will change every year, quarter (three months), monthly, or weekly based on some financial variable such as the interest rate of Federal Treasury notes.

Capitalization

This is the process of adding interest that has accrued onto the loan principal. Subsequent interest then begins to accrue on the new principal. Capitalization is typically an action that is taken when a loan becomes severely delinquent and the lender has no ability to foreclose on the loan and collect on any security interest such as a house or other real property.

Disbursement

This when and how a borrower is to receive the funds that they have borrowed. The disbursement date can vary based on the type of loan and the state in which the loan was obtained.

Servicing

Servicing means taking care of the loan after the money is disbursed and until the loan is completely repaid. Many times servicing also means holding the records and associated documents of the loan even after it has been repaid. Servicing includes:

* Billing the borrower.
* Recording payments.
* Keeping track of the amount of money left to be repaid.

Sometimes the lender will change servicers or sell the borrower’s loan to someone else who uses a different servicer. This can be confusing to the borrower because payments will be sent to a different address. It’s usually easier for the borrower if the servicer remains the same throughout the life of the loan.

Minimum Payment

This is the least dollar amount of payment that will be acceptable to the lender on any given payment date. Even if the loan is small, the borrower must make the minimum payment each month until the loan has been fully repaid.

Term

This is the repayment period of the loan. Home loans typically have fixed terms of 15 or 30 years. Credit cards have open ended terms and are referred to as revolving accounts.

Default

Being in default is defined differently for different types of loans. Basically, it means being delinquent in repaying a loan more than a certain number of days (the grace period) or failure to comply with any of the other terms of the promissory note. Generally missing one payment does not mean the borrower is in default.  But it is important that you make all payments on time to avoid a ding to your credit.

Being in default subjects the borrower to a variety of extra expenses and penalties. Generally the remedy for a default is more than just bringing the payments up to date. Sometimes it means you must repay the entire loan immediately.

If you default on a federal or state loan, your lender and the government can take a number of actions to recover the money, including:

* Withholding your tax refunds.

* Withholding part of your salary if you work for the federal government.

* Suing and taking you to court.

* Informing credit bureaus which might affect your credit rating. As a result, you may have difficulty borrowing money for a car or a house.

* Requiring you to repay your debt under an income “contingent” or alternative repayment plan. You could end up repaying more than the original principal and interest on your loans!

Forebearance

A forebearance is an agreement between the lender and the borrower to reduce or postpone the borrower’s monthly loan repayment for a defined, limited period. This must be a documented agreement and will typically extend the term of the loan to account for the skipped or reduced payments.

These are just some of the terms you will come across when reviewing loan documents. Make sure you carefully review all terms and conditions before entering into any loan agreement.

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Unfortunately, a credit score is a lot easier to damage than it is to repair.  But learning how to fix bad credit may save you from embarrassing loan or credit card denials, or even from being turned down for a new job.

If you find yourself in a situation where your credit score has dropped due to late payments, excessive debt, or any of a number of other factors, it is key to take proactive steps to repair your credit by raising your FICO score.  The FICO score is the industry standard for assessing an individual’s credit worthiness and is a numeric grade that is calculated from a variety of historical components around that individual’s payment history and credit management.

The FICO system is widely used, but it is far from perfect.  Most lenders use the score as a starting point when assessing credit worthiness and will also factor in other intangibles when making credit decisions.   These intangibles could include job and residence stability.  But the process does start with your FICO score.

FICO scores range from 300 to 850 and the higher your score, the better credit terms you are generally eligible for.  To get the best rates, you generally need to have a score at 700+.  Anything below 600 is looked upon critically by potential lenders.

The first step when learning how to fix bad credit, is to make sure the information being used to calculate your FICO score is accurate and up to date.  There are three major credit reporting agencies that generate the information used to calculate your FICO score.  You can review that information by obtaining a comprehensive copy of your credit report.  If you don’t want to pay the cost to obtain one online, you can get one free report per year from AnnualCreditReport.com.

Once you get your report, look it over carefully. Are there records of past due payments you can show you made on time? Are there accounts still listed that have been closed? Worse, is someone else’s account or address listed under your name? One reason to regularly check your credit report is to see if identity thieves have been opening accounts in your name. If you find any mistakes, write to the reporting agency and ask to have the information corrected. You should get a response within a few weeks.  If not, call them to ensure the corrections get made.

OK, so now you know what your report says about you. Unfortunately, while the law gives you free access to your credit reports, you’ll have to pay to get your FICO score. Some lenders will provide your score when you apply for a loan. But if you want to know beforehand, you have to go to MyFico.com and pay $15.95. (You can sign up for a free 30-day trial once.)

What are the factors that go into calculating your FICO credit score and will they help you in learning how to fix bad credit?

The most heavily weighted component of the FICO score is your payment history.  The single most important thing you can do to maintain good credit or begin to repair bad credit is to pay your bills on time.  This includes all loans you currently have outstanding such as home mortgages, car loans, and credit cards.  The later you are in making payments, the worse it is for your score.  And closing an account that has a history of late payments will not erase that history.

The next biggest factor in the FICO calculation is the total of how much you owe.  This includes the balances on all outstanding credit cards, car loans, and home mortgages.  The easiest way to control this component and begin restoring your credit, is to pay down credit card balances.

The next largest factor in the FICO credit score calculation is your percentgage of borrowing power used.  If you’re at the max limit on your credit cards, even if you are making payments on time, it represents a risk that you are financially strapped and at risk of being unable to maintain a timely payment schedule.  Once again, pay down your credit cards to alleviate the impact of this component.

The last three components of the FICO score are more lightly weighted in the calculation, but are still important.  The first is length of credit history.  Lenders like to see a track record of good credit.  The second is new credit.  Opening up a lot of new accounts in a short period of time is a risk indicator to a lender.  The third is the types of credit you maintain.  There are two primary types of credit - revolving and installment.  Installment loans such as car loans and mortgages are typically fixed payments for a fixed period of time.  Credit cards don’t have fixed payments and are open ended.  These are called revolving credit accounts.  A lender likes to see that you have good payment experience with both types of credit.

When evaluating how to fix bad credit, it is important to take immediate steps to verify credit reporting information, adopt good payment habits, and shore up credit account balances.  Over time, these steps will ensure that your FICO score begins to rise.

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The Internet has become an indispensable tool for the consumer. This is especially true when it comes time to do comparison shopping. And in these days of historically low interest rates, maybe it’s time to take a look at refinancing your home to save money and potentially accelerate your equity growth by switching to a shorter term loan. So, how can we utilize the Internet to find the best refinance rates and programs?

There are hundreds of lenders that publish their rates and programs online. But common sense tells us, that unless we have special circumstances such as bad credit or little money to put down, we should probably limit our research to the major lenders. You want to visit the sites of the banks you do business with, lenders you’ve borrowed from before, and the major players such as Countrywide, BOA, and Citibank.

There are also many sites where you can see a daily comparison of the “market” interest rates for various loan programs such as fixed 30 year, fixed 15 year, and the various adjustable rate (ARMs) mortgages that are available. The key is to find the best refinance mortgage program that meets your needs.

For instance, I refinanced out of a 30 year fixed loan into a 15 year fixed with a monthly payment increase of less than $200. That means for a little bit more each month I will be paying off my loan in roughly half the time. That’s saving a ton of interest.

After you’ve done your research into the market online refinance rates and decided which loan program works best for you, you’ll want to compare those market program rates with those offered by the lenders you might want to apply with.

These lenders will have web sites where you should carefully read through the terms and conditions of the loan programs you are interested in. However, for this to be of any value, you also need to do some homework into terms common in the mortgage industry.

• APR
• Origination Fee
• Closing Costs
• Title Insurance
• Discount Points
• Escrow

You should understand what these terms mean. They will all affect the bottom-line costs and true relative value of the loan you’re evaluating. Finding the best refinance rates is all about making apple-to-apple comparisons between programs. That involves much more than just the quoted interest rate.

The best refinance mortgage rate is the one that best fits your financial situation and allows you to save the most money either in your monthly mortgage costs, or in in the interest paid over the life of the loan. You can do all your research into finding the best refinance rates online, just make sure you look at all the factors that go into the ultimate financial benefits of the loan.

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A payday loan, also referred to as a paycheck advance, is a small, short-term loan that is usually intended to cover some one-time unexpected expense. It is typically repayable upon receipt of the borrower’s next paycheck. Finding low cost payday loans is just a matter of utilizing the online resources to compare lenders and programs.

Definitely do your research before wandering into that little shop around the corner with the flashing neon “Checks Cashed Here” sign.

In the United States, payday loan regulations differ from state to state. Some states mandate strict interest rate limits on these types of loans. A state may have a maximum annual percentage rate (APR) that any lender doing business in that state can charge. Some states have outlawed payday loans altogether.

One key to comparing terms on payday loans is to ensure that you know the difference between APR and EAR. The EAR, or effective annual rate, is the rate charged when compounding assumptions are in effect. APR ignores the effects of compounding.

For example, let’s assume that a payday loan company charges a $15 surcharge on a $100 two week payday loan. That means you get $100 today and will pay back $115 in 2 weeks.

The annual percentage rate on that loan is:

15% X 26 = 390% (surcharge divided by amount borrowed then multiplied by 52 divided by the number of weeks in the term)

However, the EAR is:

1.15^26 - 1 X 100% = 3686%

This essentially assumes that if the lender makes 15% every 2 weeks and reinvest that 15% into a new loan, he will earn 3686% on his original investment of $100 in a one year period.

Quite a lucrative lending business to be in. But if you do find yourself in dire straits and need to find a low cost payday loan, make sure you understand which type of interest rate they are quoting.

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There are many resources on the Internet where you can compare various cheap credit cards that are available. The key is, as with any financial transaction, to do your homework on the issuer of the card and the terms that come attached.

One of the first steps in deciding on what kind of card you want to obtain is to determine your primary goals. Credit cards are usually tailored for different types of users, terms, and bonuses.

These include:

Bad Credit / No Credit Credit Cards

These cards are for individuals who are just starting out or that have a spotty credit history. They are usually secured by cash you will deposit with the issuer. The credit limit on the card is equal to the cash you deposit. This is an excellent way to establish or rebuild your credit rating.

Balance Transfer Savings

These types of low interest rate credit cards offer premium rates for balances transferred from other credit cards. Be cautious when evaluating these cards as the low interest rate may be a teaser and subject to change.

College Student Credit Cards

Cards marketed to college students may or may not be secured. They do offer rewards and often tie these rewards to school related programs.

Hotel Rewards

There are many cheap credit cards that are issued by some of the major hotel chains such as Marriott and Hilton. Having one of these cards earns rewards in the form of hotel points that can be used for free stays. These cards are actually issued by a bank that partners with the hotel chain.

Zero Percent Intro Rate Credit Cards

There are cards that offer a 0% interest rate for an introductory period. Be sure you determine how long the intro period is. And if you are ever late during this introductory period, the intro rate usually reverts to a standard rate.

Gas and Airline Rewards

Gas and airline companies have joined the hotel industry in partnering with banks to issue credit cards that earn rewards that provide rebates on gas purchases or free airline miles.

Travel Rewards

The travel industry has also taken advantage of bank partnerships to issue cards that earn bonuses at many of the major travel agencies.

Regardless of what motivates you in your search for a cheap credit card, whether it be a low interest rate, rewards, or to repair your credit, always do your research. Online credit card approvals are available for most issuers. So also take advantage of those online resources to compare the various card offers that are out there.

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